The Insurance Council of Australia Board has implemented changes to the new 2020 General Insurance Code of Practice. This follows from the impact of Covid-19 and results in the Code being re-written to enhance the right and expectations of customers. This new Code places a higher threshold on insurers and places a focus on supporting insured parties involved in a contract for insurance pursuant to the Insurance Contracts Act 1984 (Cth).

The Code’s standards apply to the relationship between an insured and insurer including the expectations when making a claim, including strict timeframes for an insurer making a decision on a claim and processing requirements for making complaints.

Claims Requirements

The Code is intended to make a positive influence across all aspects of general insurance. This Code now makes it is a requirement that once relevant information is provided to an insurer, an insurer will be required to make a claims decision within 10 business days from receipt of such information.

Decisions must be made within 4 months of receiving a claim from an insured, and in circumstances where a decision is not made within the requisite time-frame an insurer will be required to inform the insured of the Complaints process and real consideration will be had as to whether any duties of utmost good faith, on part of an insurer, have been breached.

Financial Hardship

The Code aims to provide assistance to individuals who are in difficult financial circumstances. In such circumstances, the Code sets out particular provisions which aim to ensure that those individuals which are in dire financial circumstances are protected. These include:

  • Employees and agents of insurers are required to be trained in Financial Hardship; and,
  • Customers having difficulty in meeting their financial obligations must be identified as suffering financially and insurers are required to provide support and place any recovery action on hold if it is identified that a person is suffering from financial hardship.

If a person is entitled to support resulting from financial hardship, the insurer may be required to delay payment dates, agree to instalment arrangements, reduce a lump sum payment or even deduct excess from a claim.

The Code formally launched in early 2020, and all signatories were required to be compliant with the Code by 1 July 2021. The new Code now sets the industry standard and continues to play a role in encouraging and guiding the general insurance industry in meeting community needs, standards and expectations in the unpredictability of life.