New insurance code of practice

A NEW general insurance Code of Practice launched recently by the Insurance Council of Australia (ICA) aims to encourage higher standards in the industry for dealing with customers and settling claims. In a world first, the code will not only provide protection for consumers, but for business policyholders as well. However, the Combined Small Business Alliance of WA is concerned that loopholes will allow multinational insurers to bypass the code. In 1995, general insurers introduced Australia’s first General Insurance Code of Practice. The new code, however, goes above and beyond current regulation as many of the standards in the code were absorbed into the Financial Services Reform Act, according to the ICA.Under the code, general insurers are required to: •meet agreed timeframes for handling claims or responding to complaints; •fast-track claims or make advanced payments when customers show they are in financial hardship as a result of the damage or loss leading to their claim; •enable claims arising from a natural disaster to be reviewed after they have been settled; •give reasons if they are unable to provide cover, and refer customers to another insurer, the Insurance Ombudsman Service or the National Insurance Brokers Association; •provide better and clearer information to consumers; and handle disputes and rectify mistakes in a transparent and efficient manner and in a specified time. ICA president Michael Hawker said the code followed more than a year of extensive consultations and represented a real bonus for consumers. “With more than 41 million insurance policies in force and $55 million in claims paid each business day in Australia, the improved service standards the code promotes will have a genuine impact on policyholders,” Mr Hawker said. The Australian Chamber of Commerce and Industry has welcomed the new code. The approach adopted under the new code means that there are now consistent standards, rules and timeframes for all policyholders and that will be welcomed by business, according to the ACCI. But Oliver Moon, chief executive of the Combined Small Business Alliance of WA, said while the new policy was a start, it still had a ways to go in protecting small business from overseas-based insurers that marketed insurance products in Australia. “I think it’s fine to have a code, but if it’s full of holes, it won’t go far enough,” Mr Moon said. Insurance costs represented a huge cost of operating for small businesses, having risen substantially in recent years, Mr Moon said. An ICA spokesman said that while the new code did not, and could not pertain to international insurers, the Federal Government was currently looking into regulating those groups as a result of outcomes from the HIH Royal Commission. In a recent survey by the National Insurance Brokers Association, more than 70 per cent of respondents said that 73 per cent of their clients were small to medium enterprises.