The independent panel tasked with reviewing the General Insurance Code of Practice has acknowledged the Insurance Council of Australia’s (ICA) recently published Action Plan but has urged further action in critical areas.
The Action Plan outlined insurers’ responses to recommendations from the panel’s final report and the House of Representatives Standing Committee on Economics’ “Flood Failure to Future Fairness” report.
The parliamentary inquiry, published in October 2024, examined insurers’ claims handling processes following the 2022 South-East Queensland and Northern Rivers floods, the costliest flood disaster in Australian history.
While recognising the volume of regulatory and industry recommendations insurers must navigate, the independent panel emphasised the need for more concrete steps to improve consumer protections and outcomes.
“The review panel would like to see the industry take the steps needed to make the code part of the contract with their customers so that the code provisions are backed by contractual enforceability, as is the case for the Banking Code of Practice,” it said.
Additionally, the panel called on the ICA to seek authorisation from the Australian Competition and Consumer Commission (ACCC) to implement pricing changes that provide consumer benefits.
“Consumers should not pay more for monthly premiums versus annual premiums, and premiums for renewals should not be more expensive than premiums for new customers,” it said.
It also noted that some recommendations were left for individual insurers to consider at their discretion or required further examination. The panel urged the ICA to address all recommendations and submit an updated code to the Australian Securities and Investments Commission (ASIC) as soon as possible.
Until formal implementation, the panel encouraged insurers to voluntarily adopt recommended changes and provide transparency on industry progress.
Previously, the ICA had supported 78 out of 187 recommendations made across various inquiries. The latest Action Plan expanded this by addressing additional recommendations while assessing the feasibility of implementation.
Of the 150 recommendations directed at insurers, 109 have been either fully accepted or accepted in principle, while 28 require further evaluation. Ten will be left to the discretion of individual insurers, and three pricing-related recommendations were not supported.
The ICA has stated that incorporating pricing regulation into the code is not an appropriate approach, citing concerns over competition laws. However, some insurers have indicated they will review their pricing models independently to ensure they align with consumer expectations.
The industry’s response also incorporated recommendations from inquiries into climate change impacts on premiums and financial abuse. Some proposed changes, such as updates to the Code of Practice and frameworks for vulnerable customers, have already been put into effect.
