FSC overhauls life insurance code

In a statement, the FSC said it would make the changes to the code following a two-year consultation period with industry.

Key reforms to be made to the code as a result of the consultation would include making it ASIC enforceable, broadening its application to include third-party distributors, introducing additional protections around surveillance of claimants, and implementing clear obligations on insurers around communicating with policyholders.

The FSC said it intended to submit the revised code to ASIC to make certain provisions enforceable by the regulator, while others would be enforced by the Life Code Compliance Committee.

The LCCC would also be given additional powers to enforce sanctions on FSC insurer members who significantly breached the code.

“Life insurers recognise the importance of the code and of reviewing the Code as part of a process of continual improvement,” FSC chief executive Sally Loane said.

“There are many lessons learnt since the code was introduced which are incorporated in this response document. The government will soon introduce legislation which would see certain provisions of the code made enforceable, breaches of which would be subject to civil penalties."