General Insurance Code of Practice (The Code) An Overview for Staff Prepared by MSM Compliance Services Pty Ltd
Who Are MSM Compliance? MSM is a national professional services business focused on the general insurance industry. Your company has engaged MSM to assist in the management of its obligations as a holder of an Australian Financial Services License. MSM helps to ensure that you and your company comply with your AFS License obligations with the least disruption to your core business.
Why are you reading this? To provide you with an overview of the key parts of The Code as updated in Feb 2014. It will present you with a synopsis, but not the detail. You should still take the time to read the full General Insurance Code of Practice and ideally the Financial Ombudsman Service (FOS) Code of Practice Guidance Paper.
Why is there a Code? Designed to go beyond the requirements of the law. Developed by the industry in lieu of more Government legislation. Puts concepts in plain English – much more user friendly than legislation.
Code Background Developed by the Insurance Council of Australia (ICA). Input from FOS, industry bodies, ASIC and consumer groups. A code was first developed in 1994, revised in 2006, May 2010, Feb 2012 and again in Feb 2014. Code Governance Committee (CGC) oversees Code Compliance.
Objectives of Code Promote better, more informed relations between insurers and customers; Improve consumer confidence in the general insurance industry; Improve dispute resolution of complaints between insurers and customers; Commit insurers and the professionals they rely upon to higher standards of customer service.
Does The Code apply to our business? ICA members (insurers) adopt the code as part of their membership obligations. Other Insurers / Financial Services Providers can subscribe to the code voluntarily by applying to the Financial Ombudsman Service (FOS). The Code applies to any insurance brokers and/or underwriting agencies acting under binders for insurers covered by Code.
What Activities Does Code Apply To ? All activities of an insurer (or their agent) excluding: –Life and Health Insurance products –Workers Compensation / CTP / Medical Indemnity / Marine Insurance –Reinsurance –Coinsurance if any insurer has not adopted The Code –Limited application to Wholesale clients (new in 2014)
Key Broker Obligations When Acting Under A Binder Requirement to advise client that we are acting under a binder. –Invoices, Emails, Letters –Brochures –Verbal discussions Explain in whose interests we are acting for. Comply with The Code where relevant. Include in Conflict of Interest table.
Buying Insurance – Retail Clients Only Only ask for relevant information. Immediately correct mistakes and errors. Operate in an efficient, fair, honest & transparent manner. Communicate in plain English. If unable to provide insurance cover: –Provide clients with the information we relied on –Give reasons and refer client to ICA/NIBA where relevant. If client unhappy – refer to complaints system. Refund monies in 15 days on cancellation. 14 days notice of cancellation on instalment policies.
Representative Standards – All Clients Provide services in an honest, efficient, fair and transparent fashion. Notify Insurer of any complaint. Advise client of insurer for whom they act. Only perform functions that match their expertise. Receive appropriate training/education and retain records for 5 years. Monitor representative performance and implement corrective training where required.
Standards for Claims Service Suppliers - Retail Clients Only Provide services in an honest, efficient, fair and transparent fashion. Providers with trained / qualified / experienced staff who are competent and professional. Only providers that hold relevant Licences Providers can only subcontract on approval. Providers to inform of services authorised Notify insurer of any complaints.
Claims – Retail Clients Only Provide services in an honest, efficient, fair and transparent fashion. Only request relevant information. Immediately correct any errors or mistakes we make. Agree reasonable timeframes where standards cannot met due to complexity etc. Fast track payments etc. due to urgent financial need. Don’t discourage clients from lodging claims.
Claim Timelines – Retail Clients Only Accept / Reject in 10 days where all information available. Where all information not available: –Advise of additional information required – 10 days –Appoint assessors/adjusters – 10 days –Provide time estimate to decision – 10 days –Advise of assessor appointment – 5 days. –Keep you informed of progress - every 20 days. –Respond to routine queries - 10 days –Experts to provide reports in 12 weeks
Claim Decisions – Retail Clients Only Make decision within 10 days of receiving all information. Decision in 4 months unless Exceptional Circumstances apply – 12 months. Claim denial obligations: –Give reasons in writing –Inform of rights to request information/documents. –Supply such information in 10 days.
Claims Handling – Retail Clients Only Responsible for workmanship and materials when insurer selects and authorises repairer. Timelines not applicable: –Meet alternative agreed timelines –Conduct and timetable was reasonable –Delay caused by External Expert where we reasonably followed them up Claim standards do not apply where proceedings commenced.
Financial Hardship – All Clients Individual or Third Party beneficiary who owes us money under an insurance policy. Individual where an insurer is seeking recovery for damage or loss. Does not apply to insurance premiums. Client can request assessment for Financial Hardship. Client must provide reasonable evidence. Recovery action put on hold pending assessment.
Financial Hardship – All Clients Where hardship rejected provide reasons, if circumstances change can reapply. Where hardship assistance accepted: –Work with payee on options e.g. extending due dates, pay in instalments, reduced lump sums etc. –Where an insured/third party beneficiary - advise financial institutions on request. –Payee can request release/discharge waiver. –Insurer to confirm such release/discharge/waiver in writing.
Debt Collection – All Clients Any Third Party agencies will identify the insurer and the nature of the claim. Agents must facilitate/support Financial Hardship advice and process. Insurers/agents comply with ACCC & ASIC Debt Collection Guidelines. Provide debtor written confirmation for bankruptcy purposes.
Catastrophes – Retail Clients Only Respond in efficient, professional and practical and compassionate fashion. Settlement within one month, triggers 12 month review option even after release is signed. Work with industry co-ordination and communication.
Complaints and Disputes – Retail Clients Only Conduct in fair, transparent and timely manner. Make information on process available on website and written communication. Only request and take into account relevant information. Provide client with complaint contact information. Rectify errors immediately. Complaint process does not apply to complaints resolved in 5 days. Stages One and Two of complaints process to be finalised within 45 days or inform client of FOS option and contact details.
Complaint Stage 1 – Retail Clients Only Respond within 15 days. Where additional information required agree reasonable alternative timeframe. Keep client informed of progress every 10 days. Respond to complaint in writing including: –Our decision and reasons –Complainants right to take claim to Stage 2 and then to FOS
Complaint Stage 2 – Retail Clients Only Complaint to be reviewed by a different staff member with relevant experience, expertise and authority. Keep you informed every 10 days. Respond with decision in 15 days if all information provided and investigation completed. If unable to meet 15 day deadline, agree alternative timetable. Written final decision and reason and FOS contact details.
Information and Education – All Clients ICA to promote Code and develop guidelines. ICA to encourage non subscribers to adopt Code. Subscribers to work with ICA and promote Code / Insurance / Financial Literacy and the Insurance Industry. Help clients to access insurance.
Code Governance / Enforcement – All Clients CGC are responsible for monitoring and enforcing Code Compliance. Breaches of Code can be reported to CGC. Insurer to provide annual report to CGC. Insurers to report breaches of Code to CGC within 10 days. Co-operate with CGC where required. Promptly implement corrective action / training etc. where required. CGC can impose non financial sanctions.
Where To From Here? Please take the time to read The Code and the FOS Code Guidance Paper and if you require further clarification discuss with your Supervisor/Manager