The Senate has referred an inquiry into the life insurance industry to the Joint Parliamentary Committee on Corporations and Financial Services for report by 30 June 2017.
The Terms of Reference are:
- the need for further reform and improved oversight of the life insurance industry;
- assessment of relative benefits and risks to consumers of the different elements of the life insurance market, being direct insurance, group insurance and retail advised insurance;
- whether entities are engaging in unethical practices to avoid meeting claims;
- the sales practices of life insurers and brokers, including the use of Approved Product Lists;
- the effectiveness of internal dispute resolution in life insurance;
- the roles of the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority in reform and oversight of the industry; and
- any related matters.
The examination of the relative benefits and risks to consumers of direct insurance, group insurance and retail advised insurance is expected to pay particular attention to the life insurance policies that are taken out as part of a superannuation package, including for income protection insurance and lump-sum payouts on death or total and permanent disability.
Typically super funds automatically deduct premiums unless the member specifically opts out.
The inquiry will also look at the effectiveness of internal dispute resolution in life insurers. The external dispute resolution review does not deal with internal dispute resolution.
This inquiry will look at insurers’ internal complaints mechanisms and what improvements can be made.
Life Insurance Code
Separately, the Financial Services Council has published a draft of the Life Insurance Code of Practice for public consultation.