Australia’s life insurance industry faces a renewed push to strengthen consumer protections, with the interim findings of an independent review of the Life Insurance Code of Practice highlighting gaps in transparency, customer support, and enforceability.
The voluntary code was introduced in 2017 by the FSC to help insurers deal with customers across product design, sales, claims, and complaints. In 2022, CALI was established as the industry body for life insurers, and ownership of a revised code was transferred to the organisation in 2023.
Last year CALI commissioned former regulator Peter Kell to assess whether the code was still fit for purpose, reflects community expectations, and improves consumer experience while remaining workable for insurers.
So far, the review has involved more than 40 stakeholder meetings and submissions from industry, regulators, consumer groups, and legal experts.
The 74-page report finds broad support for the code’s structure and scope, with stakeholders agreeing it has contributed to improvements in areas such as claims handling timeframes and provides a solid foundation for consumer trust.
However, it also identifies a “wide range” of opportunities to strengthen obligations and address emerging issues, particularly as regulatory settings and consumer expectations evolve.
Premium complaints
Among the most prominent findings is a need for clearer communication with consumers, especially around premiums.
Complaints data shows premiums remain a major pain point, prompting recommendations that insurers better explain upfront how premiums work, including the likelihood of increases over time, and the impact of discounts ending.
The review also calls for improved transparency in underwriting decisions. Where cover is declined or offered on non-standard terms, the report recommends insurers provide clearer, written explanations, including plain-English summaries of the data underpinning decisions.
…gaps were identified in support for First Nations customers and those experiencing financial hardship…
Support for vulnerable customers is another major focus. While the Code already includes commitments in this area, stakeholders argue the life insurance sector lags behind banking and general insurance.
The review points to the need for a broader, more proactive approach, including adopting recognised standards on consumer vulnerability and better tailoring support to individual circumstances.
Specific gaps were identified in support for First Nations customers and those experiencing financial hardship, with recommendations to enhance culturally appropriate services and improve access to assistance.
Mental health
The report notes concerns that insurers often default to exclusions or declines without consideration of alternatives, and that outcomes are rarely tailored despite existing code commitments.
…Stakeholders raised concerns about limited powers for the Life Code Compliance Committee…
At the same time, industry submissions argue for greater flexibility to manage the rising cost of mental health claims.
Enforcement and future direction
Stakeholders raised concerns about limited powers for the Life Code Compliance Committee and inconsistent consequences for breaches, prompting consideration of stronger enforcement mechanisms and even contractual enforceability.
The interim report includes 72 recommendations, including:
- Contractual enforceability of the code, providing advisers stronger grounds to challenge insurer behaviour
- Premium transparency
- Clearer explanations for underwriting decisions
- Clearer explanation of mental health disclosure requirements
- Earlier and clearer communication about premium types
- Stronger financial hardship support triggers
- Tailored support for vulnerable clients
- Assignment of a dedicated claims contact person
- Claims decision timeframes of between five to 15 days
- Improved claims communication and transparency
Submissions on the interim findings are open until 8 May 2026, with a final report expected to shape the next iteration of the code and potentially support a future application for ASIC approval.
