What role does the General Insurance Code of Practice have within the insurance industry?

6.61 There are two key insurance industry codes of practice in Australia. The General Insurance Code of Practice (the Code) is a self-regulatory code that binds all general insurers who are signatories to it.[77] The FSC Code of Ethics and Code of Conduct (the FSC Code) is compulsory for all FSC members.[78] Industry codes such as these ‘play an important part in how financial products and services are regulated in Australia’.[79]

6.62 The ALRC recommends that both codes should include diversity statements or objects clauses that encourage consideration of the needs and circumstances of a diverse range of consumers, including mature age persons.

General Insurance Code of Practice

6.63 The Code was developed and introduced by the ICA—the representative body of the general insurance industry in Australia—in 1994. It applies to all general insurance products, including travel insurance and sickness and accident insurance. It does not apply to workers’ compensation or cover reinsurance. The objectives of the Code are to:

• promote better, more informed relations between insurers and their customers;

• improve consumer confidence in the industry;

• provide complaint and dispute resolution mechanisms; and

• commit insurers and other insurance professions to high standards of customer service.[80]

6.64 The Code is binding on all signatories, including members of the ICA.[81] The Financial Ombudsman Service monitors compliance with the Code. Its findings are reported to the Code Compliance Committee which monitors compliance with the Code and has power to make determinations and impose sanctions.[82]

6.65 The Code provides that an independent party will be appointed by the ICA to review the Code every three years. The last review occurred in 2009, however other amendments were made in early 2012 and these commenced on 1 July 2012. In July 2012 a new review of the Code commenced. The review is being conducted by Mr Ian Enright and an advisory panel. A final report is due in May 2013.[83]

6.66 The ALRC proposed that the review examine ways in which the Code could be amended to encourage insurers to consider the needs and circumstances of mature age persons.[84] A number of stakeholders supported this approach.[85] Others, such as Suncorp, opposed the proposal on the basis that the Code

is a statement of principles designed to guarantee exceptional customer service standards and to protect the rights of policyholders and is supported by the objectives of the Code. Suncorp is of the view it is not appropriate, in any way, to limit these standards to a specific target group but considers it should apply to all consumers, without exception within the community.[86]

6.67 Similarly, the ICA submitted that while it ‘does not consider the Code an appropriate place to address anti-discrimination issues in detail, having regard to the strong regulatory regime already in place’ it recognised that

it may be appropriate to have an overarching principle in the Code committing Code participants to working to satisfy the general insurance needs of the whole community regardless of financial situation, age or disability.[87]

6.68 Mr Enright has indicated that issues of access and diversity have been raised in the course of the review, and they are ‘terribly important’. However he has suggested that addressing such issues in the Code at this stage would be a ‘significant shift’ and is not possible in the timeframe remaining for the review of the Code.[88] The ALRC suggests that issues of access and diversity, including in relation to mature age persons, might usefully be considered in the course of the next review of the Code and recommends the inclusion within it of a diversity statement or objects clause.

The FSC Code of Ethics and Code of Conduct

6.69 The FSC is the industry association for the financial services sector, which includes the life insurance industry. Compliance with the FSC Code is compulsory for all FSC members.[89] It contains specific rules as well as broader ethical principles to guide decision-making.

6.70 In response to the ALRC’s question about the review of other industry codes such as the FSC Code, the FSC submitted that its Code is not life insurance specific or tailored and

is not relevant to the specific subject matter relating to insurers and mature age persons. Therefore it should not be reviewed in the context of insurers and mature age persons. The intent of the [FSC Code] is to promote the highest integrity among the broad FSC membership. We do not believe it is appropriate to limit (or tailor) the operation of this Standard to a particular group or demographic.[90]

6.71 The ALRC recognises the particular roles these two codes play in the context of Australia’s insurance industry. The ALRC does not consider it appropriate to encourage or mandate the removal or extension of age-based limitations on insurance policies, or to limit the standards contained in the codes to a specific group, in this case mature age persons. However, the ALRC is of the view that it is appropriate for the codes to contain a diversity statement or objects clause that encourages consideration of the needs and circumstances of a diverse range of consumers. Such a statement should include reference to mature age persons, among other consumers.

Recommendation 6–5 The General Insurance Code of Practice and the Financial Services Council Code of Ethics and Code of Conduct should include diversity statements or objects clauses that encourage consideration of the needs and circumstances of a diverse range of consumers, including mature age persons.