ACIL challenges ICA's response to code review

The Australian Consumers Insurance Lobby (ACIL) has raised concerns over the Insurance Council of Australia’s (ICA) initial response to the General Insurance Code of Practice Independent Review.

In a newly released report, “Falling Short: Why the Industry’s Initial Response Fails to Deliver Meaningful Reform in the Code of Practice,” ACIL argued that key consumer protection issues remain unaddressed.

Concerns over industry reforms

ACIL’s report outlined several areas where it believes the ICA’s response falls short:

• Omissions from the Flood Inquiry: The first phase of proposed changes does not incorporate 49 recommendations from the Flood Inquiry, leaving certain consumer protection gaps unaddressed.
• Minimal structural change: The ICA’s reforms are described as largely cosmetic, avoiding deeper systemic issues that impact policyholders.
• Claims handling practices: The report alleged that expert assessments are sometimes adjusted to minimise insurer payouts, putting policyholders at a disadvantage.

ICA’s position on code reforms 

In its initial response to the review, the ICA said it supports most of the panel’s recommendations and is working to implement key improvements.

The council said that it has either accepted or is actively considering 78 recommendations, which aim to enhance policyholder protections, streamline claims processes, and improve industry transparency. ICA representatives also highlighted ongoing initiatives, such as the development of standardised contract terms and increased support for customers in vulnerable situations.

ACIL chairperson Tyrone Shandiman said the ICA’s approach reflects a reluctance to address longstanding concerns in the insurance sector.

“The industry response is yet another predictable and concerning failure to address systemic issues in the insurance industry,” he said.

ACIL backs Peter Dutton’s push for industry overhaul

Shandiman reaffirmed ACIL’s support for Opposition Leader Peter Dutton’s push for insurance industry overhaul, saying that consumers deserve stronger protections.

“Opposition Leader Peter Dutton threatened to ‘intervene’ in the market by breaking up big insurers – clear evidence that policymakers are fed up with the industry’s failures. Consumers deserve stronger protections, and if the industry won’t act, we will. ACIL is prepared to take this fight to the court of public opinion, leveraging media, political engagement, and legal avenues,” he said.

ACIL’s report calls for the Australian Securities and Investments Commission (ASIC) to delay approval of the revised Code of Practice until additional protections are introduced. ACIL is also encouraging industry insiders to come forward with information about potential misconduct.

In response to calls for insurance industry overhaul, ICA CEO Andrew Hall noted that premium reductions and risk management are linked.

“The only sustainable way to address insurance affordability is to reduce or remove risks,” he said, as reported by The Guardian. “This means investing in resilience-enhancing infrastructure, strengthening building stock and reforming land use planning, and requires significant investment from and collaboration with governments.”