“Without ASIC’s seal of approval and ongoing monitoring the code will be ineffective in addressing the plethora of problems facing the life insurance industry,” he posited.

“The draft code is an improvement on the current version, and, with some revision, it will result in improved value and better claim outcomes for consumers.

“However, it’s likely to be too little too late given its failure to adopt key measures demanded by numerous inquiries. In line with the Productivity Commission’s recent recommendations, ASIC may soon lead a taskforce that takes control of the code and addresses these lingering deficiencies.”

The ALA has already outlined several areas of the draft code to the FSC that it believes still demand “substantial revision”, it added.

“We are particularly concerned that the draft code does not demand more transparency and clarity from insurers in their communication and dealings with customers from the point of sale through to claim time,” said Mr Mennen.

“The draft code should, but does not, oblige insurers to inform customers, in clear prominent terms, if the customer’s policy no longer meets recognised minimum industry standards. Too often consumers are not fully aware of the scope of their insurance coverage and do not realise that they have signed up to a policy with sub-standard or out-of-date terms and definitions.”

“The code also continues to allow insurers to withhold information from claimants that is prejudicial to the insurer. In some instances, this would be illegal, but it is always a breach of the insurer’s duty to operate in ‘good faith’.”

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ALA is aware, he continued, of circumstances where insurers have withheld documents prepared by internal medical officers recommending an admission of liability because the claims officer has decided not to follow that advice.

Clearly, this type of information is precisely the information that the law requires must be disclosed to the consumer and a clause should be included in the code to that effect, he surmised.

“The code also persists with an excessively broad definition of ‘unexpected circumstances’ which the insurer can exploit to extend the claims assessment deadline, meaning it’s not a deadline at all. This needs to be addressed in the code as lengthy delays in assessing claims are unfair and very stressful for claimants who are at their most vulnerable,” he concluded.