The Insurance Council of Australia’s (ICA’s) new, plain English Code of Practice comes into effect on 1 July this year, although insurers have until 1 July 2015 to become compliant with the code.
The release of the new code follows a 12-month, independent review of the existing code, after comprehensive consultation with consumer groups, the Federal government and industry stakeholders.
NIBA’s legal counsel Mark Radford explains that it is a voluntary code run by the ICA that commits insurers to high standards of service.
“It is designed to promote better and more informed relationships between insurance companies and their customers,” he says.
The code enables clients of insurers to make a complaint to the ICA’s Code Governance Committee (CGC), the entity that considers complaints and imposes relevant sanctions for any breach. These sanctions are binding for members.
So why should brokers be across it? Radford explains the code applies directly to insurers who are ICA members, but can indirectly affect brokers to the extent they act as an agent of an insurer.
In this situation, brokers are typically required by the insurer in the agency agreement to act in accordance with the code’s requirements, so the insurer meets its obligations under the code.
“Brokers acting for clients need to understand insurers’ obligations so that to the extent an insurer may be acting in breach of the code, the broker can raise the relevant right under the code with the client,” says Radford.
So what are some of the key changes to the existing code? Here is a summary, according to Radford:
- An improvement in the plain language used in the Code to assist members and consumers in understanding it.
- The consolidation of certain matters such as information access to make the code simpler.
- The limitation of the application of certain sections to “retail insurance”, for instance section 3.7.
- Changes to cancellation rights and special notice requirements imposed on insurers in relation to instalment policy cancellations.
- Clarification of, and changes to, claims conduct requirements, in particular those that apply to the rights of policyholders when they are in urgent financial need of benefits