Insurers agree $100k fine for Fair Insurance Code breach

10 June 2015

Insurers agree $100k fine for Fair Insurance Code breach

Members of the Insurance Council have agreed to impose on themselves a maximum fine of up to $100,000 for unresolved significant breaches of the Fair Insurance Code. “This gives the new Code the necessary teeth to function as an effective self-regulatory regime” says Tim Grafton, Chief Executive of the Insurance Council.

The new Fair Insurance Code comes into effect 1 January 2016 and commits ICNZ members to higher standards of service in all their dealings, including meeting minimum timeframes for communicating at claim time and acting reasonably when faced with the non-disclosure of relevant information by the insured.

Nationwide, in the last five years, almost all claims (96%) were accepted by insurers. Grafton says, the vast majority of insurance claims are processed with no problems, and even a smaller number again reach the dispute resolution scheme, which shows insurers are already adequately addressing the issues.

If a Dispute Resolution Scheme, such as the Insurance and Savings Ombudsman (ISO) or Financial Services Complaints Limited (FSCL), find there has been a significant breach that has not been resolved through its processes, it reports this breach to the Council.

Grafton says “The Insurance Council will establish a Code Compliance Committee to investigate unresolved significant breaches and to work with members to put those breaches right”. The majority of the Code Compliance Committee will be independent people with the relevant expertise.

If the Committee and the member who has breached the Code cannot agree on a solution to remedy the breach, then the Committee can report to the ICNZ Board. The ICNZ Board can then, under ICNZ’s Rules of membership, award up to $100,000 against the member, as well as reprimand the member or expel them from membership.

“I congratulate our members on formalising the high standards they place on themselves through the revised Code standards, which are a significant advancement on the current Code, and by supporting those standards with an appropriate and robust process in the rare event if things go wrong” says Grafton.

ENDS

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