Understanding the General Insurance Code of Practice
If you’re in the general insurance industry, you are probably already part of the 90% who are signatories to the General Insurance Code of Practice, A voluntary code developed by the Insurance Council of Australia, it seeks to raise standards of customer service and provide protection for policyholders.
One of the requirements of the code is that all employees know their obligations and are trained in the latest procedures. If your organisation doesn’t currently have training in place, you would be wise to institute it as part of a learning management system .
The first General Insurance Code of Practice was created in 1995 and was updated in 2005. The new code includes benchmarks relating to claims and complaints procedures and the provision of consumer information.
The code does not apply to:
- workers compensation
- compulsory third party insurance
- marine insurance
- medical indemnity insurance
- life insurance issued by a life insurer
- health insurance issued by a registered health insurer.
The main areas of the code cover a signatory’s responsibilities when selling insurance, dealing with claims, responding to disasters, providing information and handling complaints.
When selling insurance, the insurance provider agrees to:
- Only use relevant information when assessing an application for insurance
- Give a customer reasons if an application is refused
- Refer them to the relevant bodies for more information.
When a customer makes a claim, the insurer agrees to respond promptly (within 10 business days), unless more information or further investigation is required.
Where financial hardship is a factor, the insurer agrees to fast-track the claim and/or make advance payments.
Responding to Disasters
When a claim is made after a natural disaster, the insurer agrees to observe a cooling-off period, so that the claimant has adequate time to assess the true extent of their damage and losses.
The insurer agrees to provide customers with accurate, up-to-date information on general insurance matters that it easy to read and understand.
If a customer is unhappy with a product or service, the insurer agrees to advise them on how they can lodge a complaint and will respond to such a complaint within the agreed time frames.
Another section of the code requires signatories to accept full responsibility for workmanship carried out and materials used by their own authorised repairers.
Yet another area deals with a signatory’s responsibility to ensure all employees, representatives and service providers know and understand the code and meet or exceed the required standards.
The General Insurance Code of Practice is monitored and enforced by the Financial Ombudsman Service, which has the power to impose sanctions and call for remedial action if signatories breach any part of the code.
It is in the interest of every general insurer to adopt the provisions of the code and to ensure their employees receive compliance training on their obligations.
After all, a voluntary code of practice is infinitely preferable to increased government legislation, with the stringent compliance requirements and harsher penalties that would no doubt accompany it.