Life insurance lobby pushes back against calls for greater oversight

We’re sorry, this feature is currently unavailable. We’re working to restore it. Please try again later.

Advertisement

This was published 7 years ago

Life insurance lobby pushes back against calls for greater oversight

By Georgia Wilkins
Updated

Life insurers are pushing back against calls for greater regulatory oversight, saying consumers are already being well served by the industry despite a series of scandals that have rocked the sector.

Speaking at a life insurance conference in Sydney on Thursday, Sally Loane, chief executive of the Financial Services Council, which represents the bank-owned life insurance sector, said the majority of consumer concerns had already "been addressed or were being progressed by the industry".

"Life insurance is a highly regulated industry," she said.

"The FSC strongly believes further regulation would be unnecessary. Self-regulation is an efficient way to bring about pro-consumer changes in the sector."

Financial Services Council CEO Sally Loane has pushed back against calls for changes to consumer protection laws in the life insurance sector.

Financial Services Council CEO Sally Loane has pushed back against calls for changes to consumer protection laws in the life insurance sector. Credit: Sahlan Hayes

The comments come a week after the corporate regulator called for sweeping changes to consumer protection laws following its investigation into Commonwealth Bank's troubled life insurer CommInsure.

The Australian Securities and Investments Commission found the insurer's use of out-of-date medical definitions to deny claims was not against the law but fell "short of what the community reasonably expects, and can result in poor outcomes for consumers".

But Ms Loane said the industry was capable of policing itself and that strengthening the law was unnecessary.

"Self-regulation does work. It is more efficient, less costly and less time-consuming to reform from within than for the government to go through the lengthy consultation process of additional legislation."

Advertisement

The insurance sector's new industry code of practice has been criticised by consumer and mental health groups for failing to go far enough to protect consumers, especially in regard to "junk" policies and mental health exclusions.

It was also criticised for failing to cover insurance taken out through super funds, which represents more than 70 per cent of life insurance policies, and failing to be registered with the corporate watchdog.

Mental health groups have accused the industry of ignoring calls to address discrimination, saying its treatment of people with mental health conditions was unethical and potentially unlawful.

Alexandra Kelly, a principal solicitor for the Financial Rights Legal Centre, said the industry had already shown an unwillingness to work with regulators by failing to register its code with ASIC.

"Why they're shy about this is not clear," she said.

"The rhetoric appears to be 'we can do it ourselves' ... but when the spotlight isn't on they are going to delay and obfuscate."

ASIC wants the power to examine insurance claims – something it currently cannot do, with the Corporations Act expressly carving out "handling insurance claims" from its definition of a financial service.

In October it called for the carve-out to be scrapped in its review of the life insurance sector, and last week reiterated those calls.

Most Viewed in Business

Loading