Looking for an honest and reputable insurer? See if they follow the Life Insurance Code of Practice.
Insurance companies in Australia are bound by strict laws, but many will also voluntarily subscribe to non-mandatory commitments. One of these is the Life Insurance Code of Practice, administered by the Financial Services Council (FSC).
If you’re looking for an insurer that doesn’t just treat you like a number then it might be worth prioritising those that subscribe to the Life Insurance Code of Practice.
What’s the code and does it really make a difference?
A life insurance company doesn’t have to subscribe to the code, but once they do they’ve promised to follow it. If they don’t, they may be sanctioned or penalised.
The code is designed to:
- Promote high standards of service to customers. This is an understanding that anyone who’s making a life, disability or trauma insurance claim is probably going through a difficult time, and that an insurer’s job is to help.
- Provide a benchmark of consistency within the industry. This sets up expectations for insurers, such as quicker claims processing and prompt handling of any complaints. It’s meant to raise the bar across the industry.
- Establish a framework for professional behaviour and responsibilities. When something works well for the customer it might be shared more quickly across the industry so that all subscribing insurers can lift their game.
At its heart, the code has ten commandments for life insurance companies.
The ten commandments of the life insurance code of practice:
- We will be honest, fair, respectful, transparent, timely, and where possible we will use plain language in our communications with you.
- We will monitor sales by our staff and our authorised representatives to ensure sales are appropriate.
- If we discover that an inappropriate sale has occurred, we will discuss a remedy with you, such as a refund or a replacement policy.
- We will provide additional support if you have difficulty with the process of buying insurance or making a claim.
- When you make a claim, we will explain the claim process to you and keep you informed about our progress in making a decision on your claim.
- We will make a decision on your claim within the timeframes defined in the Code, and if we cannot meet these timeframes you can access our complaints process.
- If we deny your claim, we will explain the reasons in writing and let you know the next steps if you disagree with our decision.
- We will restrict the use of investigators and surveillance to ensure your legitimate right to privacy.
- The independent Code Compliance Committee will monitor our compliance with the code.
- If we do not correct code breaches, sanctions can be imposed on us.
According to the FSC, the Life Insurance Code of Practice has made a clear difference and raised the bar for all participating life insurance providers.
Which life insurance companies have subscribed to the code?
Below are the FSC members that are bound by the code from 30 June 2017.
- AIA Australia Limited
- Allianz Australia Life Insurance Limited
- AMP Life Limited
- ClearView Life Assurance Limited
- General Reinsurance Life Australia Ltd
- Hallmark Life Insurance Company Ltd (part of the Latitude Financial Services Group)
- Hannover Life Re of Australasia Ltd
- MetLife Insurance Limited
- MLC Limited
- Munich Reinsurance Company of Australasia Limited
- NobleOak Life Limited
- RGA Reinsurance Company of Australia Limited
- SCOR Global Life Australia Pty Ltd
- St Andrew's Life Insurance Pty Ltd
- St George Life Limited
- Suncorp Life & Superannuation Limited (trading as Asteron)
- Swiss Re Life & Health Australia Limited
- TAL Life Limited
- The Colonial Mutual Life Assurance Society Limited (trading as CommInsure)
- Westpac Life Insurance Services Limited
- Zurich Australia Limited
It’s important to know that just because you have insurance with one of the signatory companies doesn’t mean all of its products are aligned with the Life Insurance Code of Practice. It's a good idea to speak to an adviser.
Which life insurance products are covered by the code?
The following product types are covered by the code:
- Term life insurance/death and terminal illness
- Total and permanent disability (TPD)
- Trauma/critical illness insurance
- Disability insurance
- Funeral insurance
- Income protection/salary continuance
- Business expense cover
- Consumer credit insurance (CCI) issued by a life insurer
But the code does not apply to:
- Annuities and investment life products, except any component considered as a life insurance policy
- Whole of life and endowment insurance products
- Insurance products issued by general insurers
- Health insurance products issued by health insurers
How the code is enforced, and how to make complaints
The Life Insurance Code Compliance Committee (Life CCC) at the Australian Financial Complaints Authority (AFCA) was set up to monitor the scheme and address issues.
- Making complaints. If you think a company has breached the code, you can make a complaint to the Code Compliance Committee by emailing firstname.lastname@example.org or calling 1800 367 287 and asking to speak with the Code Team Investigations Manager.
- Claiming compensation. Depending on the nature of the violation, you may be entitled to reimbursements or other corrections. You should approach the insurer for remedies first, and if you feel they have unduly refused then you can make a complaint to the Australian Financial Complaints Authority (AFCA).
What does a code violation look like?
A code violation might be anything that violates the ten commandments of the Life Insurance Code of Practice.