Changes to the GI Code of Practice

The ever changing general insurance landscape

With numerous reviews and legislative changes, general insurance continues to evolve.
Flex Insurance, which provides one of the most flexible strata insurance covers on the Australian market, will provide regular updates on changes that impact on consumers, particularly small businesses, insurance brokers and other intermediaries in the strata market.

Insurers and brokers have self-regulated codes which have a significant impact on how they operate fairly and provide favourable consumer outcomes.

We will look at both codes and how they affect not only the insurance industry but, more importantly, how consumers and small businesses obtain the right help with their insurance needs.

Changes to the General Insurance Code of Practice

The General Insurance Code of Practice (Insurance Code) is a benchmark for self-regulation of insurance. It was established by the Insurance Council of Australia (ICA), whose members have agreed to abide by it.

The Code’s standards apply to many features of a customer’s relationship with their insurer, including when buying insurance, what to expect when making a claim, and the processes for making complaints.

It’s a living document that the ICA says strives to reflect evolving community expectations.

The newly updated 2020 Insurance Code is the result of a two-year review. The ICA considered feedback and input from various organisations, including member insurers, consumer advocates, government and regulators.

The General Insurance Code Governance Committee (CGC) independently monitors the Code to make sure insurers are meeting their obligations, and achieving service standards consumers can trust. Sanctions can be imposed on insurers by the Committee.

The ICA believes the 2020 Insurance Code is more customer-centric than ever before.

In light of COVID-19, financial hardship provisions have been strengthened and include requirements that employees and agents involved in debt collection are trained on the financial hardship requirements of the Insurance Code.
The issue of a customer experiencing financial hardship is especially crucial with claims.

Insurers are expected to:

• Identify if there is a need for a claim to be fast-tracked due to an urgent financial need
• Consider a financial hardship request for an excess to be waived or reduced
• Put any recovery on hold if they identify that a customer is experiencing financial hardship

Another key change is a streamlined complaints process. Insurers have to make a decision on a customer’s complaint within 45 days. They can take their complaint to the independent Australian Financial Complaints Authority at any time.

Other changes include:

• Mental health provisions
• Provisions of sum insured calculators for buildings
• Year on year premium comparisons
• Claims management and claims investigation standards
• Changes to complaints and breaches management processes

Brought into the Insurance Code earlier were provisions to ensure insurers’ policies support customers experiencing family violence.

Changes to the Broker Code of Practice

The Broker Code of Practice (Broker Code), established by the National Insurance Brokers Association (NIBA), is part of a national self-regulatory scheme.

Under the Broker Code, brokers agree to follow its standards when dealing with current and prospective individual and small business clients.

By subscribing to the Brokers Code, insurance brokers have committed to:

1. Continuously improve standards of practice and service
2. Promote informed decision-making about their services, and
3. Act fairly and reasonably in delivering those services

Brokers are required to establish an internal process for resolving disputes with customers.

The Brokers Code is monitored by the Insurance Brokers’ Compliance Council (IBCC). Its members represent consumers and insurance brokers. Any breach of the Broker Code by a broker may give rise to binding orders or sanctions being imposed on them.

The Broker Code is a living document. The latest submissions on updating the Code were completed in April 2021 and NIBA aims to submit the revised code to the Australian Securities and Investments Commission for approval in the second half of the year. It’s expected the new Broker Code will be launched at the NIBA convention in October 2021 and take effect by mid to late 2022.

We will look at the changes to the Broker Code when the new version is launched.