"The Gold Standard": ICA approves code of practice changes
Rob Whelan of the Insurance Council of Australia explains the recent changes to the General Insurance Code of Practice and what they mean for brokers.
Video transcript below:
Reporter: As the Insurance Council Board approves the revised general insurance code of practice, we spoke to ICA CEO, Rob Whelan about what the changes are and what they mean. Whelan says the changes have come off the back of a lengthy industry review.
Rob Whelan, CEO & Executive Director, Insurance Council of Australia
Rob Whelan: It was a very thorough review indeed and it ended up with 60 recommendations, not all of which were approved by the Board, but the vast majority were. And the key changes I guess are firstly it’s very much easier to read. It is designed for the consumer to understand exactly what the obligations of the insurers are to their consumers. It sets I think quite a high standard of self regulation which is exactly what we wanted to do and it looks at issues that I guess the previous code had not really dealt with satisfactorily, I think things such as financial hardship and how we deal with financial hardship.
Reporter: He also notes the changes to signatory obligations are in line with this same ethos of creating an industry bench mark.
Rob Whelan: Well it is around establishing a benchmark of the level of consumer service that they provide. So it’s a standard that we hope at least people will apply to across the board. It’s the expectation if you are a signatory that that is the minimum standard that you have in terms of your interaction with your customers. But of course the vast majority of our insurers, our member companies already exceed that level of service, so it is a competitive advantage to do so. But it’s something that people can be absolutely assured of is the minimum standard that insurers will have to abide by into the future. And we hope the way it’s been designed and the way it’s been reviewed and put together, it will last for at least 5 years without any major revision from thereon. So we are very pleased with the way it’s come out.
Reporter: However, the biggest changes have been around governance and sanctions.
Rob Whelan: The governance structure is probably one of the biggest changes that we have had to the code. The new governance structure will be very independent of the Insurance Council Board. It will be able to make its own decisions on the extent to which breaches have occurred by individual insurers and will be able to apply sanctions and those sanctions are essentially reputational sanctions, they are not financial sanctions as such. But I think all the insurers guard their brands and their reputations very jealously. So that’s a significant sanction. So it is a different code and I think it’s a vastly improved code and we are hoping it’s going to be a gold standard in terms of self regulation for any industry, let alone the insurance industry.
Reporter: The effect the code changes will have on brokers is an increased level of service from insurers and underwriters.
Rob Whelan: Brokers operate under their own code of practice of course which is designed by NIBA. So I think over time those codes of practice will become more harmonised and I think that’s very much the intention of NIBA, to move down that path as I know if they have done a review just recently as well. So we’ve gone and developed our code and that code is between the insurer, the underwriter and the customer. So in essence the impact on brokers will not be that much in that sense, because it doesn’t relate to brokers’ clients of course. They are clients of the brokers, their customers. But from a broker’s point of view in terms of the service providers that they use, that is the insurers and the underwriters, they will see a much higher level I think of minimum standard of service that they will be required to provide into the marketplace and I think that’s very good news brokers.