The Life Code Compliance Committee (Life CCC) has released a report indicating a rising trend in compliance breaches by Australian life insurers, marking the third year of increasing infractions.
Despite a 9% surge in overall breaches of the code obligations from July 1, 2022, to June 30, 2023, the report, titled “Annual Industry Data and Compliance Report,” did show a reduction in the number of customers affected by these breaches.
“It is encouraging to see a decrease in the number of customers impacted by breaches for the second year in a row. This indicates we are making headway in delivering better outcomes for consumers,” said Life CCC Chair Jan McClelland AM.
While acknowledging the decline in the impact on customers as a step forward for consumer welfare, McClelland pointed to the growth in the total number of breaches as a sign of persistent challenges within the sector.
“Unfortunately, this positive trend is offset by an overall increase in breaches for the 2022-23 period. This marks the third consecutive year of rising breaches, signalling that there is still much work to be done,” she said.
Claims handling obligations emerged as a particularly problematic area, with an 18% increase in related breaches noted. The report criticised the sector’s delays in claims processing, highlighting the adverse effects on customer trust and industry reputation.
“Failing to address claims promptly not only breaches code obligations but also adds unnecessary stress for customers, undermining trust in the industry. Life insurers must prioritise meeting claims handling and communication time-frames to improve customer satisfaction and meet community expectations,” McClelland said.
Concerns were also raised about the likelihood of under-reported breaches and complaints by some insurers.
McClelland’s call to action for life insurers was clear: take decisive steps to bolster compliance and protect consumer trust amid these challenges.
