Code of Practice for super-based life insurance needed ASAP
3rd Nov 2016
The proposed Superannuation Industry Working Group and development of a Code of Practice (CoP) for the life insurance component in superannuation is a welcome development, but one that should have occurred much sooner, the Australian Lawyers Alliance (ALA) said today.
ALA spokesperson Josh Mennen said the Financial Services Council (FSC) had previously released a CoP, however it did not cover claims made through superannuation-owned life insurance, through which the majority of working Australians get their cover. Mr Mennen said that Code therefore did not apply to the majority of life insurance claims made, and was otherwise deficient in many respects, including that it is not ASIC approved.
Mr Mennen said that the ALA had long called for a fully-functional Code covering superannuation based insurance claims, as many of the scandals that have been in the news in recent months would not have been covered by the FSC’s Code. Mr Mennen said the ALA had previously circulated its own draft Code and added that it was pleasing to see the life insurance industry finally taking decisive action.
“This is a huge opportunity for industry and consumer groups to help repair the life insurance industry’s damaged reputation,” Mr Mennen said.
“It’s a chance to restore public confidence that life insurance policies will pay out on genuine claims, and that claimants are respected in a timely and fair claim process.”
“We are hopeful that the CoP for life insurance in superannuation will deliver the much-needed consumer protections around claims assessment. This is an area of deep community concern following the many recent media stories of genuine claims that have been mishandled by insurers through unreasonable delays, doctor-shopping, oppressive information requests, unnecessary surveillance and other dubious tactics,” Mr Mennen said.
“The CoP should also ensure that the life insurance products themselves are of a high quality and represent good value to the public. This is very important because most Australian households are underinsured and rely on low-cost superannuation-based insurance to provide financial security against loss of work due to injury or illness.”
"The CoP will only be successful if consumer concerns are fully reflected through an open and transparent consultation process, and the ALA looks forward to being involved in that process, given that its members act for thousands of life insurance claimants,”
“We are particularly pleased that the CoP is intended to be binding, enforceable and independently administered. These elements will be key to ensuring real protections for vulnerable consumers,” Mr Mennen said.
Mr Mennen said the ALA would be writing to the working group to express interest in collaborating to progress this important project.