Life insurers breached the industry’s own code of practice at least 315 times in just six months, a review of complaints has found.
Most of the 11 insurers, which law firm Maurice Blackburn lodged complaints against in early 2018, then failed to respond to initial inquiries from the body overseeing the code, the Life Code Compliance Committee.
In a scathing report issued on Wednesday, the committee said many insurance companies “lacked robust frameworks for monitoring compliance” with the code and slammed the industry for taking far too long to clean up its act, saying this was now “largely only occurring as a result of the review rather than the subscribers’ desire to ensure they comply with the code”.
It warned insurers that subscribe to the code that it would be closely monitoring their future performance and had the power to publicly name and shame persistent offenders.
The only insurer so far publicly sanctioned by the committee is OnePath.
“Subscribers must take their code compliance far more seriously than they have to date,” the committee said.
“Compliance monitoring must be prioritised, ongoing and systematic.”
The industry set up the code committee in 2017 after it was rocked by media reports, including a joint Four Corners/Fairfax Media series, that exposed allegations of misbehaviour taking in bullying, the use of outdated medical definitions and doctor shopping by insurers.
Maurice Blackburn lodged 700 complaints with the committee in early 2018 against insurers AIA, AMP, Asteron, CommInsure, Hannover, Metlife, MLC, OnePath, Suncorp, TAL, Westpac and Zurich.
At the time OnePath belonged to ANZ but the insurance part of the business has since been sold to Zurich.
In its report, the committee said that because it had only limited resources it decided to fully investigate 31 complaints and sent the rest back to insurers, along with a list of questions it wanted answered.
“Most subscribers failed to respond to the committee’s request, which was both perplexing and disappointing,” the committee said.
“Whilst some relevant general information was gleaned from the ongoing individual investigations, this was insufficient to gain an overall perspective.”
The committee said it finally got responses after it escalated the issue by writing to insurance company chief executives in August last year.
The Maurice Blackburn principal Josh Mennen, who lodged the complaints, said they were the “tip of the iceberg”.
“Given all these breaches of the code relate to delays in the processing of consumers’ claims, the insurers should take immediate action to pay compensation, including penalty interest,” he said.
He said the lengthy delay in the process proved the code lacked teeth and called for it to be beefed up by giving the corporate regulator oversight of the complaints process.
“Had the code had real teeth as we have been calling for several years, our clients’ cases would not have been impacted with significant delays and would instead have been dealt with in a timely fashion,” he said.
