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Insurers breach own codes hundreds of times

  • March 12 2020
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Invest

Insurers breach own codes hundreds of times

By Cameron Micallef
March 12 2020

Insurers are breaking their own code and refusing to process insurance claims and requests for reviews within a certain time frame, an investigation has found.

Insurance

Insurers breach own codes hundreds of times

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  • March 12 2020
  • Share

Insurers are breaking their own code and refusing to process insurance claims and requests for reviews within a certain time frame, an investigation has found.

Insurance

According to Maurice Blackburn, the life insurance industry has failed to meaningfully reform its claims assessment culture and processes in the wake of a highly critical independent report showing widespread non-compliance with its Code of Practice.

An investigation by the administrators of the Code, the Life Code Compliance Committee (LCCC), sparked by Maurice Blackburn, found over 700 breaches of the insurers code in a six-month period in 2017.

Maurice Blackburn principal Josh Mennen said today’s findings by the LCCC lend weight to the view that many insurers failed to sign up to the Code of Practice in good faith and with due preparations, but rather in an attempt to rebuild their public image after damning media stories at the time.

“Today’s report suggests that despite all the rhetoric and promises to do better before and after the Hayne royal commission, many insurers have treated their own code as a paper tiger and this casts doubt on the industry’s ability to rebuild public trust,” Mr Mennen said.

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“These hundreds of confirmed breaches are merely the tip of the iceberg because, no doubt, many more have gone undiscovered since I lodged this complaint with the LCCC two years ago.”

The breaches of the code are directly impacting consumers as they are getting delays in funds due to slower action, Mr Mennen found.

In investigating the bulk complaint, the LCCC sampled a small number of alleged breaches and identified the systemic issues which caused the unreasonable delays, and then tasked the insurers to apply those gaps and inadequacies across the affected consumers’ cases.

“It defies belief that almost four years after the code commenced, insurers are still yet to implement appropriate training and documents management systems to ensure compliance with their own code.”

The LCCC also criticised the insurers for failing to respond and co-operate with the LCCC in a timely manner.

Mr Mennen concluded: “Clearly, many of the insurers must see the administrator of the code as a toothless tiger when they take over a year to respond to its requests.

“Despite the LCCC’s best endeavours, this attitude is unlikely to change until the Code of Practice is given teeth through regulatory oversight by ASIC and meaningful sanctions for any breaches.”

Insurers breach own codes hundreds of times
Insurance
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About the author

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Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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