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General Insurance Code of Practice Annual Report of the Code Compliance Committee

2013 – 2014

Table of Contents

Contents

ABOUT THE COMMITTEE .................................................................................................. 3

ABOUT THIS REPORT ....................................................................................................... 3

EXECUTIVE OVERVIEW .................................................................................................... 4

CHAIR’S MESSAGE ........................................................................................................... 5

1. INTRODUCTION ...................................................................................................... 6

2. THE COMMITTEE’S DEED OBLIGATIONS ............................................................. 7

3. FOS CODE REPORTS TO THE COMMITTEE ........................................................ 8

4. DETERMINATIONS AND SANCTIONS .................................................................. 16

5. 2014 CODE TRANSITION ...................................................................................... 16

6. OTHER ISSUES FOR CONSIDERATION .............................................................. 17

7. KEY PERFORMANCE INDICATORS ..................................................................... 21

8. COMPLAINTS ABOUT THE COMMITTEE ............................................................. 22

9. CODE PARTICIPANTS ........................................................................................... 22

10. CONCLUSION ........................................................................................................ 22

Schedule 1 – Members of the Committee 2013–2014 ....................................................... 23

Schedule 2 – Aggregated Breach Data for Year Ending 30 June 2014 ............................. 25

Schedule 3 - KPI Report for the period 1 June 2013 to 31 May 2014 ................................ 62

Schedule 4 - List of Code Participants as at 30 June 2014 ............................................... 68

11 APPENDICES TO THE REPORT ........................................................................... 71

Annual Report – GICCC 2013-2014

ABOUT THE COMMITTEE The General Insurance Code Compliance Committee (the Committee) was established under the General Insurance Code of Practice (the Code) to oversee compliance with the Code’s obligations by Code Participants. The members of the Committee during the reporting period 1 July 2013 to 31 March 2014 were:

John Anning – Industry Representative

Julie Maron – Consumer Representative; and

Michael Gill – Independent Chair.

Schedule 1 to this Report provides further biographical detail about the members (and alternate members) of the Committee during the reporting period. On 6 February 2014, the Board of the Insurance Council of Australia (ICA) approved a revised version of the Code. The 2014 Code commenced on 1 July 2014 and amongst other things, established a new Code governance framework. Code Participants have until 1 July 2015 to comply with the revised Code’s obligations. A new Code Governance Committee has been appointed as part of that new framework, to monitor compliance with the new Code. From 1 July 2014 it also assumed responsibility and oversight for matters that were previously before the Code Compliance Committee under the 2012 Code.

ABOUT THIS REPORT This report outlines the key activities of the Committee during the reporting period, including the discharge of its specific functions under the Code, to:

consider quarterly aggregated breach data provided to it by the Code Compliance and Monitoring team of the Financial Ombudsman Service (FOS Code);

monitor Code compliance through reports received from FOS Code;

make determinations and impose sanctions where FOS Code has reported a failure by a Code Participant to correct a Code breach;

identify serious, or systemic, issues with regard to the Code or its application; and

subject to privacy law, report back to FOS on any findings or determinations made by the Committee as a result of data provided by FOS Code.

The Committee was supported during this period by its secretary Dr. June Smith and the FOS Code Compliance and Monitoring team that provided administrative, secretariat and code monitoring services pursuant to an outsourcing agreement.


EXECUTIVE OVERVIEW

Between 1 July 2013 and 31 March 2014: 1. The Committee received three aggregated breach data reports from FOS Code concerning

Code Participant compliance with Code obligations.

2. A total of 208 breaches of the Code were identified by FOS Code (compared to 78 in 2012–2013).

3. In addition, 6,185 breaches of the Code were self-reported by Code Participants for the 2012-2013 period.

4. Outcomes from 38 desk-top audits completed by FOS Code were considered by the Committee.

5. A total of 13 significant breaches of the Code were reported to the Committee. These breaches and the corrective action taken by Code Participants are located in Table 2, commencing on page 13 of this Report. These 13 significant breaches affected 19,444 customers. Total payments of $767,659 were made to these affected customers by Code Participants, as a result of this non-compliance. A checklist of the factors the Committee usually takes into account when assessing the significant breach data is described in Table 3 on page 15.

6. A total of 92% (191) of the 208 breaches finalised by FOS Code involved non-compliance with the claims handling standards in section 3 of the Code.

7. Section 3.5.5(b) of the Code, which was introduced in July 2012, continued to be a major source of non-compliance resulting in 72% (150) of these claims handling breaches. This activity is discussed in more detail on pages 9 and 10. The obligation relates to notification to consumers of their rights to information and review, following a denial of their claims.

8. Six areas for suggested review and improvement have been identified on page 18 for industry to consider when transitioning to the 2014 Code by 1 July 2015.

These areas include:

a) Claims Denials – ensuring consumer access to relevant information about reasons for

denial of claims and rights of review; b) Claims Handling – meeting increased claims handling demands with available

resources, including early review of claims processes; the application of the correct process when handling complaints and the importance of staff adherence to internal claims handling processes and procedures;

c) Significant Breach Reporting – effective identification, handling and remediation of significant breaches, including the effectiveness of Code breach identification and reporting systems;

d) Culture – the importance of organisational culture in complying with Code standards;

e) Financial Difficulty - meeting the revised financial difficulty obligations under the 2014 Code; and

f) Dispute Resolution – review of internal and external dispute resolution obligations on transition, including providing correct information to consumers about their dispute resolution rights.


CHAIR’S MESSAGE In the 2012–2013 Annual Report of the Code Compliance Committee, the Chair's message commenced with a statement that 'this is my final report as Independent Chair of the Code Compliance Committee'. As events have transpired, transition and other issues meant that the Code Compliance Committee has continued to have a role until 30 June 2014 and, in all the circumstances, it was thought sensible for it to manage the production of the 2013–2014 Annual Report. With the new Code Governance Committee now in place, this truly is our final report. As such, it is appropriate to both report on the specific events of the last 12 months, as well as make some more general reflections based on the life of the Code to date. Some of these comments are referred to later in this Report in a more expanded version. It was pleasing for us to note that the ICA's Code Reference Group provided positive feedback on the

value of the Committee's Annual Report for 2013–2014 and the Secretariat's updates on outcome in relation to quarterly breach data.

Some Code Participants have advised that they will actively use the Committee's commentary when transitioning to the new Code.

The objectives of this Code can't be achieved in the absence of committed cooperation from the industry and its active engagement in its self-regulatory framework. We thank the Code Participants for that. We particularly thank the staff of Code Participants who have special responsibility for Code compliance and the support given to them by senior management.

We also thank the ICA for being an unambiguous supporter of the Code and the Code's objectives. At the same time, we thank the consumer movement for the unique role it plays in bringing the Code’s benefits to the attention of insurance consumers and for working closely with the industry in achieving Code objectives as well as the review work, which led to Code enhancements.

The Committee worked very closely with Independent Code Reviewer Ian Enright during the most recent Review and, hereafter, with the ICA as the Review was implemented; we thank Ian Enright for the thoroughness of the Review Report and we also thank the ICA for its role in the implementation of Review Report Recommendations. We recognise that the Committee, having the compliance role, is uniquely placed to provide information and feedback about Code performance. It must continue to be one of the principal roles of the Committee charged with that responsibility.

With each new development within the various Codes since 1994, the industry has taken on additional obligations based on self-regulation designed to achieve Code objectives, principally to enhance relationships with the public generally and its customers in particular.

As I close my final report, I want to thank all of the industry and consumer representatives who have served with me and assisted me in the work of the Code Compliance Committee with their knowledge, experience, wisdom and generosity. I also thank the various people who have been in the key positions within the ICA and FOS (and its predecessors); without their commitment to the work of the Committee and the success of the Code within the industry, we would not be where we are today. Similarly, my thanks go to the leadership of the consumer movement in Australia for the same reason. Finally, I wish the Code Governance Committee every success as it takes up its new role and continues the life and importance of the General Insurance Code of Practice.

Michael Gill Independent Chair


1. INTRODUCTION The Report is prepared in accordance with Clause 6.3 of the Deed of Adoption (the Deed) and Clause 10 of the Code Compliance Committee Charter (the Charter). It refers to activities undertaken by Code Participants in relation to the 2012 edition of the Code, which became effective on 1 July 2012.

On 6 February 2014, the Board of the Insurance Council of Australia (ICA) approved a revised version of the Code. The 2014 Code commenced on 1 July 2014 and amongst other things, established a new governance framework. Code Participants have until 1 July 2015 to comply with the revised Code’s obligations. A new Code Governance Committee has been appointed as part of that new framework, to monitor compliance with the 2014 Code. As a result, the role of this Code Compliance Committee has ceased. Our duties and functions will be undertaken by the new Committee. This Annual Report therefore covers the period 1 July 2013 to 31 March 2014.

This Report highlights the Committee’s:

achievement against our Deed obligations during the reporting period (see section 2);

assessment of the annual Code breach and compliance review data provided to us by FOS Code (section 3);

role in the development of the new Code and governance framework (section 5);

experience and views about a range of Code compliance issues that have arisen during the year, together with our recommendations for industry improvement and review on transition to the new 2014 Code (section 6); and the

successful performance against key indicators during the reporting period (section 7).

The Committee’s analysis of Code compliance data outlined in this Report needs to begin with, and be seen in the context of, a clear statement about the relevant activity of the general insurance industry in the reporting period.

The Committee refers to the most recent industry data, submitted by the 153 general insurers and Lloyd's Australia coverholders and claims administrators that participated in the Code at that time and which is outlined in FOS’s General Insurance Code of Practice Overview for the Year 2012–2013 as a guide.

This data indicates that in 2012:

Code Participants issued 39,266,304 policies to consumers and businesses across personal and commercial lines of general insurance;

Consumers and businesses lodged 3,770,454 insurance claims with those participants;

A total 98,920 claims were declined by Code Participants (approximately 3% of the total number of claims);


Customers discontinued or withdrew at least 172,201 claims during the same period (approximately 5% of the total number of claims)1;

Code Participants internally reviewed 31,677 disputes across both commercial and personal lines of insurance business; and

Code Participants also self-identified, reported and remedied 6,185 instances of non-compliance with the Code. These breaches of the Code do not form part of the analysis outlined in this Report given they were reported in relation to the 2012–2013 period.

2. THE COMMITTEE’S DEED OBLIGATIONS

In accordance with Clause 6.4 of the Deed, the Committee is pleased to report that in 2013–2014 we complied with the terms of our Charter and the Deed.

The Committee met four times during the reporting period on 14 August 2013, 13 November 2013, 5 February 2014 and 28 May 2014. The following table sets out the attendance record of all members.

Table 1: Committee Meeting Attendance Record

Code Compliance Committee Member

Attendance Record

Actual Attendance Eligible to Attend

Chair – Michael Gill 4 meetings 4 meetings

Consumer Representative – Julie Maron 4 meetings 4 meetings

Industry Representative – John Anning 4 meetings 4 meetings

Our engagement with the Independent Review of the General Insurance Code of Practice is discussed in section 5 of this Report. We made five recommendations to the Independent Reviewer requesting he consider proposing the amendments specific to the Committee’s Charter:

the identity of a Code Participant that has reported a significant breach to FOS Code, may be reported to the Committee;

the Committee members should be under a corresponding obligation to keep the Code Participant’s identity confidential, unless subject of a naming sanction;

1 Although not all Code Participants currently have the capacity to report withdrawn claims data.


the Charter formally recognise the Committee’s ability to publish its own reports on Code compliance;

the Committee be formally given a power to develop guidance on Code compliance matters; and

the Committee be given a formal role in the promotion of the Code. As identified in section 3 of this report:

The Committee received three quarterly aggregated breach data reports from FOS Code concerning Code Participant compliance with Code obligations during the reporting period. These quarterly reports identified 208 breaches of the Code, primarily concerning non-compliance with the Code's claims handling standards.

Schedule 2 of this Report describes the aggregated data for all four quarters of 2013–2014. The fourth quarter data was not considered by the Committee during its tenure, but has since been reviewed by the new Code Governance Committee.

The Committee considered the outcomes of 38 desk top audits conducted by FOS Code during the three quarters to end March 2014.

The Committee also received reports involving 13 significant breaches of the Code, by five Code Participants.

A summary of each significant breach and the Committee’s comments on the outcomes and breach rectification are outlined in section 3.6 and Table 2 of this report. Further details can also be located in the FOS Aggregated Breach Data Report for the year ending 30 June 2014, in Schedule 2.

These 13 significant breaches impacted 19,444 consumers who received payments totaling $767,659 from relevant Code Participants. FOS Code was able to reach agreement with all relevant Code Participants about corrective action to rectify those significant breaches. Accordingly, the Committee was not called upon to consider whether enforcement action should be taken against these companies for non-compliance with Code obligations. The Committee noted one significant breach matter, which was resolved but not corrected by the Code Participant in what we believed to be a timely manner.

3. FOS CODE REPORTS TO THE COMMITTEE

3.1 Overall Breach Numbers

In accordance with obligations pursuant to sections 7.9 and 7.16 of the 2012 Code, the Committee convened to consider the quarterly reports from FOS Code.

In particular, the Committee considered whether the data enabled it to:

identify serious or significant issues of industry and/or individual non-compliance with the Code or its application;

better monitor Code compliance; and

identify recommendations for industry improvement.


The 2013–2014 Annual Breach Data Report of FOS Code is Schedule 2 of this Report. It amalgamates the data from all four quarters during the financial year.

The major Code compliance issues identified by the Committee from the three reports it received in November 2013, February 2014 and May 2014 are outlined in sections 3, 4 and 6 of this Report.

FOS Code reported that it finalised remediation of 208 breaches during the reporting period, up from 78 breaches in the previous reporting period. A total 191 breaches concerned non-compliance with the claims handling standards in section 3 of the 2012 Code. This accounted for 92% of the breaches identified by FOS Code during the reporting period and included six significant breaches. The remaining 17 instances of non-compliance with Code obligations consisted of:

six breaches of section 2 (buying of insurance products), including five significant breaches

two breaches of section 4 (responding to catastrophes and disasters)

eight breaches of section 6 (complaints handling standards), including one significant breach, and

one significant breach of section 7 (Code monitoring and enforcement).

Overall, the FOS Report highlights that 267 breaches of the Code were finalised in 2013-2014, 21 of which were significant breaches.

3.2 Types and Frequency of Breaches

FOS Code provided the 12-month breach history of every Code Participant reported to the Committee. That data did not reveal any recidivist pattern of non-compliance by any one Code Participant. However, the Committee noted a general trend in non-compliance with clause 3.5.5(b) across all three reporting quarters, continuing a pattern of non-compliance with this clause since its commencement in July 2012. We make further comment on this later in the Report. The claims handling standards in section 3.5.5 are critical as they define the information a customer should receive from their general insurer when their claim is denied, including their rights to review that decision.

The standards in part (b) of section 3.5.5 in particular require a Code Participant to notify a consumer about their right to:

ask for copies of information which the Code Participant relied on in denying the claim; and

request a review of any decision to refuse to release such information.

It is very important therefore that Code Participants ensure compliance with these obligations.

3.3 Code Compliance Reviews (Desk-top Audits)

The practice of conducting a desk-top audit of a Code Participant’s compliance with Code obligations forms a major part of the revised Code compliance monitoring framework implemented by FOS Code in July 2012.


FOS Code reported to the Committee that it completed 38 audits in the nine months to 31 March 2014. Thirty-seven of the audited Code Participants were able to demonstrate to FOS Code’s satisfaction that they had effective Code compliance and monitoring frameworks in place.

However, FOS Code identified 150 breaches of section 3.5.5(b) of the Code affecting 75 customers during the audit of one Code Participant. As an outcome of the audit, the Code Participant agreed to remedy the non-compliance. FOS Code reported that the corrective action was implemented appropriately and had addressed the non-compliance in question.

In the fourth quarter, FOS completed an additional 24 audits. Four companies were identified as not complying with aspects of the Code. All non-compliant activity was remedied.

3.4 Breaches by Source

Whilst the number of referrals received from consumer advocates alleging breaches of Code obligations was small during the reporting period, these referrals did lead to 5 of the 208 breaches that were identified by FOS Code during investigations conducted to 31 March 2014.

Referral from consumers and their advocates to a Code Monitor are very important in supporting the effective operation of any self-regulatory framework. The Committee encourages consumers and their advocates to consider referring alleged breaches of Code obligations to the new Code Governance Committee and to FOS Code.

The Committee believes that the ICA’s promotion of the new Code’s obligations to consumer advocates, together with activities by FOS Code and the new Code Governance Committee on how alleged breaches of Code obligations are investigated, should help to increase the number of referrals from consumers in future.

3.5 Breach Cause and Corrective Action

The causes of non-compliance with the Code’s obligations and corrective actions taken by Code Participants as a result, are outlined in Tables 3K, 3L and 3M under Schedule 2. A total of 48 (23%) of the 208 breaches recorded in the first three quarters of the year were associated with a failure to adhere to processes.

Throughout the year another 34 instances were identified where breaches of Code obligations were caused by the failure to adopt an appropriate process.

The 150 breaches of section 3.5.5(b) identified against one Code Participant were attributed to a misinterpretation of the Code obligation to its business model. It incorrectly believed that the standard only applied to specified classes of policies. Clause 3.5 clearly states that the claims handling standards within that section apply to all claims. The same is true in the 2014 Code.

The Committee refers to these matters in detail later in this Report but notes that the commercial ramifications of a failure to follow or implement appropriate processes to comply with Code obligations or a failure to understand the application of Code obligations to an organisation’s business model, can be substantial. We encourage Code Participants to use the transition period to review how the 2014 Code obligations will apply within their business and refine processes and procedures to accommodate the changes.


3.6 Significant Breach Reports

Section 7.3 of the 2012 Code required Code Participants to report significant breaches of Code obligations to FOS Code with 10 business days of occurrence.

The Code defines significant breach as a breach that is determined to be significant by reference to: a) similar previous breaches; b) the adequacy of arrangements to ensure compliance with this Code; c) the extent of any consumer detriment; and d) the duration of the breach. Section 7.6 of the 2012 Code also requires Code Participants to apply corrective measures within set time frames, as agreed with FOS, in response to a Code breach. Section 7.11 of the 2012 Code requires FOS Code to notify the Code Compliance Committee of any failure to correct the breach. As reported earlier, FOS Code dealt with 13 significant breaches by five Code Participants to 31 March 2014. All of these matters are now closed. In total 19,444 consumers were impacted by these significant breach matters. Total payments to these affected consumers amounted to $767,659. Detail about each of the significant breach matters handled by FOS Code during the financial year 2013–2014 is provided in Schedule 2 of this Report. A total of 21 significant breaches was recorded for the year. Table 2 provides a summary of those 13 reported breaches to the Committee by reference to the Code Participant (unique identifier used); relevant code section; nature of breach; consumer impact and corrective actions taken. The Committee identified instances during the reporting period where some Code Participants appropriately identified and reported significant breaches of their legal obligations to ASIC, but failed to take the next steps to assess whether or not the matter also amounted to a significant breach of their Code obligations and report that significant breach to FOS Code. It is often the case that a significant breach report to FOS Code results in additional or independent remedial or corrective action, over and above that taken in response to legal non-compliance. This is because Code obligations do not always correspond wholly to legal requirements. The Committee encourages Code Participants to review their diligence and governance frameworks to ensure that the internal identification, assessment and reporting of significant non-compliance with obligations, includes reference to the Code’s standards. Code Participants should assume that if licensee obligations have been breached, then it is also likely that Code obligations have also been breached unless established otherwise. FOS Code is currently restrained from identifying the name of any Code Participant that is the subject of a significant breach report including to the Committee itself. FOS Code has adopted the use of a unique identifier for this purpose. The Committee raised this matter with the Independent Code Reviewer on the basis that transparency at all levels of the Code’s operations was critical to

the achievement of the Code’s objectives and to the effective functioning of the Committee.


The Committee is pleased that both the 2014 Code and the Committee’s Charter have been amended to ensure that Code Participants will now have to report significant breaches direct to the Code Governance Committee, hence overcoming this shortcoming.


Table 2: Significant Breach Reports to the Committee to 31 March 2014

CP2 Code Section

Identified By

Nature of Significant Breach and Consumer Impact

Number ofAffected Consumers

Payments toAffected Consumers

Other Corrective Actions Status

CP 37 3.5.1 CP

Between December 2005 and July 2012 claims consultants failed to return claim excesses to 162 third party motor vehicle insurance customers, where a third party demand had not been received.

162 $111,152 (including interest)

• As the Code Participant was unable to contact 6 of the 162 affected customers it donated $2,238.36 of the total amount payable to affected customers to a children’s charity.

• No further action required as other corrective actions had been implemented earlier in response to a similar significant breach reported during 2012–2013.

Closed

CP 97

3.1, 3.2.1(a), 3.2.5 & 7.2(a)

CP

Delays occurred in processing about 15% of the CP’s travel insurance claims, including whether to accept or deny a claim in some instances. The CP’s risk and compliance team was unaware of the issues for nine months because the claims team believed that it could resolve them.

2,700 n/a

• Recruited additional claims staff to bring claims in line with Code timeframes.

• Enhanced monitoring of claims team.

• Increased oversight at all levels of management up to and including board level.

• Continuous improvement project

• t for claims handling processes and strategic review of the business underway.

• Claims team has assurance processes in place to assist in identifying files that have not been actioned within service standard timeframes.

Closed

CP 117 6.1.2 CP

A lawyer employed by a legal firm used by a Service Provider (SP), incorrectly informed a customer that if negotiations to settle a strata insurance claim failed, the CP’s complaints handling procedures would not be available to the consumer.

1 n/a

• The SP informed the consumer that he was entitled to access the CP’s internal complaints process.

• Lawyers at the legal firm were given refresher training on the CP’s internal complaints process.

• The CP audited all new files allocated to the legal firm for a defined period.

Closed

CP 128 3.1 & 3.2.5 CP About 20% of the CP’s home insurance claims incurred delays in determining whether to accept liability.

9,930 $11,615

• Increased staff numbers.

• Revised operating model, which led to improved claims handling efficiency and increased capacity.

• Established a quick settlement and finalisation process for small claims with minimal evidentiary

Closed

22 Code Participant.


CP2 Code Section

Identified By

Nature of Significant Breach and Consumer Impact

Number ofAffected Consumers

Payments toAffected Consumers

Other Corrective Actions Status

requirements.

• Conducted a detailed claim file audit of 1500 files over a three month period, to provide assurance in relation to compliance with the standards.

CP 132 2.1.4 FOS Code

The CP identified that inadequate monitoring of a new policy administration system had resulted in various customers with comprehensive motor vehicle policies being charged an incorrect premium on renewal, contrary to policy terms and other consumer publications.

6,651 $644,892

• Identified all customers affected by the issue and returned $644,892 in overpaid premiums.

• Rectified the technical fault in the policy system and audited the policy system to ensure efficacy.

• Introduced monthly monitoring of the policy system’s performance to prevent a recurrence of the issue.

• Amended its incident and breach policy to ensure that deliberations concerning whether a matter is in breach of compliance obligations are fully documented.

Closed

CP 167

2.4.5, 2.4.6(a),

2.4.6(c) and 2.4.8(a)

CP

The CP did not provide an Authorised Representative with Code, insurance and legal training and did not monitor its performance. There was a delay of four months before the matter was referred to the CP’s Breach Committee to consider whether the issue was a significant breach.

n/a n/a

• Reviewed records to confirm there were no additional compliance breaches or complaints about the Authorised Representative.

• Reviewed all products sold by the Authorised Representative to confirm that all transactions had occurred within the scope of its authority.

• Gave team members in operational roles access to its issue and incident reporting database to improve timeframes around referral of issues to CP’s Breach Committee.

• Risk and compliance team increased the frequency of review of new entries in the issue and incident reporting database to enable early identification of potential compliance breaches.

• Reduced timeframe for referral of matters from chief risk office to internal Breach Committee.

Closed


To assist industry in its transition to the 2014 Code, we have compiled a list of the typical factors the Committee considers when assessing a significant breach report by a Code Participant:

Table 3: Assessing Significant Breach Reports

1. What was the nature of the significant breach and its duration?

2. Has the Code Participant identified the real underlying cause of the breach?

3. How did the Code Participant assess the impact of the significant breach on its

customers and accurately determine the exact number of breaches or customers affected?

4. Was there any consumer detriment, what was its nature and extent, and how was

the detriment established and quantified?

5. Did the Code Participant identify the significant breach and report it within the required 10 business days?

6. What was the cause of any delays in the identification of the incident/s as a

significant breach of the Code?

7. Do the factors that led to the non-compliance suggest additional areas of non-compliance with Code obligations may exist?

8. How effective were the procedures in assessing a significant breach of the Code,

including whether deliberations and decisions were documented?

9. How effective were the arrangements to ensure compliance with the Code, including the effectiveness of the breach and incident reporting and management system?

10. Has the issue also been reported to ASIC as a significant breach of the Australian

Financial Services License?

11. If the significant breach was identified by FOS Code, why didn’t the Code Participant report it?

12. What is the compliance history of the Code Participant and have similar breaches

occurred previously?

13. What is the nature of the corrective action proposed and the timeframes for completion?


4. DETERMINATIONS AND SANCTIONS

The Committee received no reports from FOS Code during the reporting period that a Code Participant had failed to correct a Code breach. Accordingly, the Committee was not called upon to make a determination and impose sanctions under section 7.14(b) of the Code.

5. 2014 CODE TRANSITION

5.1 Outcomes of the Independent Review

The Committee made the following recommendations to the Independent Code Reviewer, which he accepted:

The Committee needs to have a formal role in promoting the Code to all stakeholders. The Committee needs to have a formal role in sharing its experience of Code compliance by

developing and publishing guidance, in addition to publishing its Annual Report. The Committee needs to have formal powers to publish its own reports without the prior

consent of the ICA. The Code should allow the identity of a Code Participant to be disclosed to the Committee

when a significant breach is reported to enhance transparency of the Code monitoring framework.

We express our appreciation at the opportunities provided to the Committee to participate and engage in the Independent Review undertaken by Ian Enright.

The Committee also thanks Ian for the thoroughness of his review and the considerable legacy left by the 60 recommendations made in it.

Between July and November 2013, the Committee engaged with the ICA during its consultation when drafting the 2014 Code. The Committee was grateful for the opportunity to engage on these most important topics.

5.2 The New Governance Framework and Transition to the 2014 Code

On 6 February 2014, the Board of the Insurance Council of Australia approved the revised General Insurance Code of Practice. The revised Code commenced operation on 1 July 2014 and Code Participants have until 1 July 2015 to transition and comply with the revised standards.

The Code was first introduced in 1994 and has undergone various revisions to ensure it remains relevant and continues to meet its objectives. Both the Independent Review process and the development of the revised Code involved extensive consultation with a broad range of consumer, government and industry stakeholders to ensure the Code works for all parties. In our view, the revisions made to the Code in 2014 enhance and clarify the rights of consumers. The Code is now in plain English and sets out clearer processes for making claims and complaints, and stronger and more detailed obligations for insurers to provide assistance to those experiencing financial difficulty.


The Committee is pleased that recommendations made by it about the importance of transparency and independence at all levels of the Code’s operations and governance framework have been accepted. This should ensure that compliance with Code obligations can be independently monitored and enforced, an objective we view as very important to the reputation of the industry. The Committee notes that the ICA will remain responsible for making sure the content of the Code meets its objectives to commit insurers to high standards of service and to promote better and more informed relationships between insurers and their customers. The Committee notes that matters related to policy and training will also remain the responsibility of the ICA under the new governance structure. As identified earlier, the Code Governance Committee (CGC) replaced this Committee on 1 July 2014. The CGC, established in accordance with the Constitution of an association incorporated under the NSW Incorporated Associations Act (the Code Governance Association), will assume responsibility for outstanding matters under the current 2012 Code, as well as all compliance matters under the revised 2014 Code. The Committee wishes the members of the new Code Governance Committee Association and Code Governance Committee every success in their new roles. The nomination of Julie Maron as the Consumer Representative to the new Committee will ensure continuity of knowledge and experience from one Committee to the other.

6. OTHER ISSUES FOR CONSIDERATION

The Committee has the opportunity to include such other matters as we may determine in this Annual Report.

The Committee identified several areas of emerging Code compliance risk during the reporting period, which are outlined in no particular order in Table 4.

We seek to share our experience and to assist stakeholders in their understanding of these issues. We encourage Code Participants to consider these matters where appropriate within their organisations, when transitioning to the revised 2014 Code.


Table 4: Issues for Consideration on Transition

6.1 Reasons for claims denials and rights of review

Section 3.5.5 commenced on 1 July 2012. It outlines the nature of the information that must be included when informing a customer in writing that their claim has been denied. Non-compliance with the standards outlined in section 3.5.5(b) of the Code accounted for a number of breaches during the reporting year. In our experience, some of this non-compliance was caused by either a failure to update the template letters used by Code Participants to communicate claim denials to consumers, or by a failure of staff and agents to use the updated templates and processes. Section 3.5.5 has been in operation for two years and we are seriously concerned that Code Participants still fail to adequately understand and apply this standard to existing business models.

No Issue Comment

1. Claims Handling Ensure that consumers have access to relevant information about reasons for denial of claims and rights of review.

2. Balancing resources with service demand

Meeting increased claims handling demands is very important and should include early review of claims processes and the importance of staff adherence to internal claims handling processes and procedures.

3. Breach Reporting

The identification, handling, remediation and reporting of significant breaches, including the effectiveness of Code breach identification and reporting systems, is critical to the success of any self‐regulatory framework. Code Participants should assume that if they are in breach of their Australian Financial Services Licensee obligations, then they may also be in significant breach of any corresponding Code obligation and this should be reported to the Committee and FOS in accordance with their Code obligations.

4. Culture

A positive and pro‐active culture supporting internal reporting of incidents will assist in reducing consumer impacts. There should be no tolerance for non‐compliance with Code obligations within the organisation.

5. Dispute Resolution

Internal and external dispute resolution obligations should be reviewed on transition, including the obligation to provide correct information to consumers about their dispute resolution rights. Code Participants should apply the correct process when handling complaints and provide customers with clear reasons for their decisions.

6. Financial Difficulty

These obligations also apply to Third Party Beneficiaries and Insureds. Consumers may ask for repayment assistance and are entitled to access complaints processes if hardship assistance is refused.


This section of the Code was an important outcome of the 2010–2011 Queensland Floods inquiries. We therefore strongly encourage Code Participants to actively monitor their compliance with this provision during transition to the 2014 Code, to reduce the levels of non-compliance with this standard.

6.2 Meeting Claims Handling Demands

There has been recurring failure to comply with different aspects of the revised claims handling standards in section 3 of the Code since they were introduced in July 2012. The Committee has also been privy to instances where Code Participants have not given the requisite priority to remedying this non-compliance. Timely remedial action has been a key consideration of the Committee when reviewing non-compliance with these standards. For example, when responding to significant breach reports caused by a failure to handle claims within appropriate timelines, the Committee encourages Code Participants to ask the following questions, amongst other things:

1. Has the Code Participant established the shortest and longest delays in claims handling? 2. Who is responsible for monitoring claims backlogs whilst the non-compliance is remedied

and limiting the detriment suffered by consumers? 3. When and how was the matter escalated internally? Were there delays caused within

reporting systems? 4. Are there any systems limitations preventing the Code Participant from determining the exact

number of breaches, rather than just auditing a sample of files? 5. Is the breach or breaches linked to a lack of staffing and resources? 6. What strategy is in place to remedy this lack of resourcing and appropriately train new staff? 7. How has the Code Participant identified consumer detriment and determined whether, and

how much, affected consumers should be reimbursed? 8. Has the Code Participant assessed the materiality of the interest that may be payable to

affected consumers pursuant to section 57 of the Insurance Contracts Act 1984? The Committee requires Code Participants to fix non-compliance promptly. Code Participants must also consider that consumer detriment is not confined to financial or compensable detriment and extends to non-financial detriment such as distress.

We also remind Code Participants of the need to modify training and supervision programs when they engage and train a large number of new staff and new contractors who have been brought on to meet increasing claims handlings demands. These staff must then be adequately monitored and supervised to ensure that the training is applied appropriately in daily practice.

Whilst the training of these employees and authorised representatives should emphasise technical compliance with the Code, it is important to ensure it also results in a real understanding of the

Code’s objectives and the application of Code obligations in practice.

To achieve this outcome we suggest that Code Participants review their training content to ensure that each module, irrespective of subject matter, includes reference to relevant Code obligations.


6.3 Identification, Handling and Remediation of Significant Breaches

Under Section 7.3 of the Code, Code Participants have a responsibility to identify and report any significant breach of the Code to FOS Code within 10 business days. Code Participants are also expected to have appropriate systems and processes to enable effective monitoring of their compliance with Code obligations and an internal governance process that allows for internal reporting. In this reporting period the Committee dealt with matters giving rise to significant breaches of the law and Code obligations. The Committee recognises that not all breaches of the law will automatically result in a breach of Code obligations. However, a Code Participant must also consider whether the issue it has identified places it in breach of Code obligations. Code Participants must also exercise caution when characterising the nature of a significant breach as resulting from a “technical”, “administrative” or “systems” error. The Committee observes that whilst the non-compliance in question may have been caused by a technical system error, a Code Participant must assess the impact of the consequences that flow from this fault, to determine whether the consequences place it in breach of Code obligations.

6.4 The importance of Culture and Reporting Significant Breaches

The Committee has identified a trend where the remediation of significant code breaches is sometimes not given the internal priority by a Code Participant that the Committee would expect. A positive and proactive culture that supports the early reporting and remediation of these incidents will reduce customer impact and organisational risk. The Committee considers it unacceptable for Code Participants to tolerate ongoing levels of non-compliance with Code obligations once a significant breach has been identified. We suggest that the new Code Governance Committee remains vigilant to any additional action that a Code Participant could reasonably take to remedy non-compliance within appropriate time limits.

6.5 Review of IDR / EDR Obligations

Code Participants must comply with their obligations to conduct complaints handling in a fair, transparent and timely manner. The provision of accurate information to consumers about complaints handling procedures and access to internal and external dispute resolution is pivotal to this compliance.

This obligation extends to service providers and third parties such as law firms, to which claims handling and dispute resolution may be outsourced.

Problems usually arise because of human error such as the use of outdated letter templates, misunderstandings about the time limits that may apply to particular actions and the process that may apply to dispute resolution. These errors usually lead to inaccurate information being provided to consumers about how they transition from internal to external dispute resolution. It is the Committee’s experience that these types of Code compliance issues arise regularly.


The Committee encourages all Code Participants to review their internal and external dispute resolution processes and procedures as they transition to the 2014 Code, to reduce the risks associated with these types of non-compliance.

6.6 Meeting Financial Difficulty Obligations

The Committee believes that all Code Participants should have rigorous processes in place to assist persons who may be experiencing financial difficulty. The Committee notes that the detriment suffered by consumers and the costs incurred to the business if Code obligations are not followed can be substantial. Code Participants should recognise the importance of the content, language and delivery of financial hardship training to their employees in relation to third party debt and motor vehicle claims and review it if necessary. The Committee also supports the development of internal guidance for staff when dealing with such cases, including the criteria for assessing financial difficulty and available outcomes. Code Participants should also ask:

Who is responsible for logging financial difficultly complaints?

Do we have a rigorous process for assessing these complaints and to ensure their timely handling?

How do we handle staff turnover, training, supervision and remedial action in divisions that deal with financial difficulty matters?

6.7 Application of the Correct Internal Process

In any given year, Code Participants are likely to introduce new template documents, processes and procedures within their commercial operations. In these circumstances, it is important that Code Participants understand the risk that staff will revert to old practices or use out-of-date templates that may not reflect current practice and Code obligations. We encourage Code Participants to review their monitoring systems and check the effectiveness of staff and refresher training programs when they implement such changes in their workplace. Monitoring adherence to new processes is also important to identify and address the underlying cause of non-compliance.

7. KEY PERFORMANCE INDICATORS

In 2009, the Committee adopted a set of key performance indicators (KPIs) by which to assess its own performance. These indicators were developed in consultation with the Consumers Federation of Australia (CFA), the ICA and the Financial Ombudsman Service.

These indicators have been updated from time to time as required.

The KPI Report for 2013–2014 is attached as Schedule 3. The Committee is pleased to report that it has met all relevant indicators in the reporting period.


8. COMPLAINTS ABOUT THE COMMITTEE

Clause 6.5 of the Deed sets out a scheme by which the Committee must handle any complaints alleging that we have not acted in accordance with our Charter or the Code.

The Committee has not received any such complaint in this reporting year.

9. CODE PARTICIPANTS

Schedule 4 to this Report provides a list of the relevant Code Participants as at 30 June 2014.

10. CONCLUSION

The work of the Committee is very much dependent on the efforts of FOS Code in particular Rose-Marie Galea, Gina Vasquez and Sherman Bernard. We thank them for their support of the Committee in providing secretariat and operational services.

The support of FOS is also much appreciated by the Committee. We thank Shane Tregillis, the FOS Chief Ombudsman, for this support and note the benefit of this contribution to our operations.

We are also very grateful for the support and advice provided to us by Dr. June Smith, FOS Code General Manager.

Finally, in conclusion, the Committee members and the Secretariat would like to thank Michael Gill for his leadership and stewardship of the Committee for more than 20 years and for the collaborative approach he has taken to the work undertaken by us all.

By the Committee:

Date: 30 September 2014

Michael Gill John Anning

Julie Maron


Schedule 1 – Members of the Committee 2013–2014

Michael Gill – Chair

Michael was appointed Chair of the Code Compliance Committee under the General Insurance Code of Practice in July 2006. He was also involved with the former General Insurance Code of Practice in the capacity as Chair of the Code Compliance Committee between 1995 and July 2006.

Michael is one of the best known lawyers working alongside the insurance industry and has earned wide respect for his close relationships with the various industry associations and companies. He is a Consultant at DLA Piper Australia in Sydney, and has practiced as a lawyer for more than 45 years in all aspects of insurance and reinsurance work. A former President of the Law Society of NSW and Law Council of Australia, he is President of the International Insurance Law Association. He was the inaugural Chairman of the Motor Accidents Authority (NSW) and was the founding President of the Australian Insurance Law Association.

Michael has recently been appointed Chair of the Insurance Brokers Code Compliance Committee.

John Anning – Industry Representative

John was appointed General Manager of the Policy Regulation Directorate, Insurance Council of Australia, in April 2007 and brings considerable experience in the areas of public policy and regulatory matters as well as in the areas of corporate and government relations.

Prior to his appointment at the ICA, John worked for the Financial Planning Association as General Manager Policy and Government Relations and was responsible for providing strategic and technical advice on regulation, public policy matters and lobbying activities.

John has also held senior management positions in government and corporate affairs roles with the Commonwealth Bank of Australia and Telstra. John was also with the Department of Foreign Affairs and Trade where his roles included First Secretary, Australian Embassy in Paris.

John has a Master of Public Affairs, Bachelor of Legal Studies and a Bachelor of Arts.

Julie Maron – Consumer Representative

Julie has been a practicing solicitor since 2001, having worked in private practice and government legal departments in Canberra, before moving to her current role as a senior consumer lawyer for Legal Aid NSW, based in Wagga Wagga in regional NSW.

Julie has assisted hundreds of consumers with insurance matters after natural disasters, including the 2010–2011 Queensland floods, the 2010 and 2012 Riverina floods and the 2013 Warrumbungles bushfire. Julie was the consumer adviser to the Independent Review of the

General Insurance Code of Practice.


Peter Gartlan – Alternate Consumer Representative

Peter has been a financial counsellor for a number of years and is based in the Yarra Ranges in Victoria. Peter is executive officer at the Financial and Consumer Rights Council, the peak body for financial counsellors in Victoria. He is currently a board director at the Consumer Action Law Centre and the Energy and Water Ombudsman Victoria. He is a former consumer representative of the General Insurance Code Compliance Committee and Insurance Brokers Disputes Ltd. He holds qualifications in financial counselling, training and assessment.

Fiona Cameron – Alternate Industry Representative

Fiona has been the ICA’s nominated alternate Industry Representative since 25 June 2010 and has broad general and insurance industry knowledge including specific knowledge of the operation of the Code, and its recent 2012 amendments, having worked with the 2012 Code Review Working Group.

Peter Rashleigh – Alternate Chair

Peter has practiced as an insurance lawyer and commercial litigator since 1971 and was admitted to partnership in the DLA Piper Australia insurance practice in 1977.

For more than 30 years he has enjoyed a diverse insurance and litigation practice that has covered all aspects of liability and insurance law. This has included professional negligence insurance schemes and advising local and international professional indemnity insurers on multi-million dollar cases. Peter is recognised as a leader in general insurance and professional liability law in Australia.

Peter is a barrister and solicitor of the Supreme Court of Victoria and New South Wales.


Schedule 2 – Aggregated Breach Data for Year Ending 30 June 2014


FOS Code Compliance and Monitoring Team July 2014

General Insurance Code of Practice

Report to the Code Compliance Committee Aggregated Breach Data

1 July 2013 – 30 June 2014


Introduction

This Report has been prepared by FOS Code Compliance and Monitoring (FOS Code) for the Code Compliance Committee (the Committee), as a summary of information based on our Code monitoring and compliance activities during the period 1 July 2013 to 30 June 2014 (the reporting period), under the 2012 General Insurance Code of Practice (Code).

The Committee met and considered our reports for Quarters 1–3 during the reporting period. As the Committee held its final meeting prior to 30 June 2014, we provided our Quarter 4 report to the new Code Governance Committee.

The information summarised in this Report consists of:

• Aggregated breach data, in accordance with section 7.9 of the Code.

• Reports of significant breaches of the Code, in accordance with section 7.12(a).

• Reports on outcomes of Code compliance reviews, in accordance with section 7.12(b).

The aggregated breach data consists of breaches and significant breaches that we recorded as closed during our reporting period. As a result, all references to breaches in this Report mean closed breaches unless stated otherwise.

We have included comparative data from 2012–2013 (the previous period) wherever possible.


1 Aggregated Breach Data – Year ending 30 June 2014

1.1 Overall Breach Numbers

We recorded 267 breaches during the reporting period compared with 78 breaches during the previous period. The increase in breaches during the reporting period is almost exclusively due to non-compliance with the claims handling standards of section 3 of the Code.

Chart 1A describes breaches by reference to the broad Code category and shows that we recorded 241 breaches of the claims handling standards compared to 61 breaches in the previous period. We also recorded a higher number of breaches of the standards applicable to buying insurance when compared to the previous period, but fewer breaches of the complaints handling standards.

Chart 1A: Breaches by Code Category—2013–14 & 2012–13

0

50

100

150

200

250

300

Buying

Catastrophes

Claim

s

Complaints

Inform

ation & Education

Monitoring & Enforcem

ent

TOTA

L

Category

106

241

81

1

267

4

61

13

78

2013‐14 2012‐13


1.2 Breaches of Section 3—Claims Handling Standards

We have detailed the breaches of section 3 in Table 1B below. Section 3 outlines the standards that Code Participants are required to comply with when handling claims.

We recorded 241 breaches of the standards of section 3, which represented 90% of all breaches during the reporting period. This included 12 significant breaches, which cut across sections 3.1, 3.2.1(a), 3.2.3, 3.2.4, 3.2.5 and 3.5.1. The significant breaches affected more than 12,192 customers and resulted in total payments of $122,767 to eligible customers. See part 1.4 and Tables 1D and 1E below.

The predominant non-compliant activity involved the standards of section 3.5.5(b) with 188 breaches, representing 78% of claims handling breaches and 70% of all breaches, during the reporting period. We identified all but two of the breaches during our annual compliance reviews of Code Participants, while a Code Participant identified and reported the remaining two breaches—

see part 1.6 below. Although there were far fewer breaches of section 3.5.5(b) in 2012–13, it was also the most frequently breached standard during that period.

The standards of section 3.5.5 describe a Code Participant’s disclosure obligations toward a policyholder when it has refused their claim and form a crucial element of its overall obligation to conduct claims in a fair and transparent manner. Section 3.5.5, and in particular part (b), (in bold text) provides as follows:

1.3 Breaches of the Standards of Sections 2, 4, 6 and 7

The remaining 26 breaches during the reporting period involved the standards of sections 2, 4, 6

and 7—see Table 1C below. Overall, there were:

10 breaches of section 2, which describes the standards that apply to enquiries, buying and renewing insurance;

six breaches of the standards of section 4 that apply when a catastrophe or disaster has occurred;

3.5 The following standards apply to all claims.

5. If we deny your claim, we will:

a) provide written reasons for our decision to deny your claim;

b) inform you of your right to:

i. ask for copies of information about you that we rely upon in assessing your claim and

ii. request a review under 3.5.3 of any decision we take to decline to release such information;

c) provide information about our complaints handling procedures; and

d) on request, other than in the circumstances referred to in 3.5.3 above, provide copies of reports from our

service providers and external experts which we have relied on in assessing your claim. The copies of external

experts’ reports will be sent to you within 10 business days of your request to us.


one breach of section 5.4, which requires Code Participants to provide clear and accessible information about the claims process, the Code and the complaints process;

eight breaches of the standards defining Code Participants’ complaints processes in section 6, and

one breach of section 7.2, which outlines Code Participant responsibility around compliance monitoring and governance processes.

Of note is that 9 of the 26 breaches (35%) were significant breaches comprising:

Five significant breaches of the standards of section 2, which apply to enquiries, buying and the renewal of general insurance products. The breaches affected 6,652 customers and resulted in total payments of $644,892 to eligible customers.

Two significant breaches of section 4.3, which describes Code Participants’ disclosure obligations when finalising a property claim connected with a catastrophe or disaster. The breaches affected 392 customers.

One significant breach of section 6, which affected one customer. Section 6 describes the standards applicable to a Code Participant’s complaints process.

We also recorded a significant breach of section 7.2(a) which requires a Code Participant to have in place processes and systems to enable it (and FOS) to monitor its compliance with the Code.

Significant breaches are discussed in part 1.4.


Table 1B: Sections 3 Breaches in 2013–14 & 2012–13 2013‐14 2012‐13 Code Section Standard Significant TOTAL Standard Standard TOTAL CLAIMS 3.1 ‐ Timeframe for making & notifying customer of claim (simple) decision 3 2 5 1 1 3.2.1(a) ‐ Notifying customer of required claim information 6 1 7 1 1 3.2.1(b) ‐ Appoint loss assessor/adjuster 2 23.2.1(c) ‐ Provide initial time estimate to make claim decision 1 1 1 1 2 3.2.2 – Appointment of loss assessor/adjuster/investigator 2 23.2.3 – Update customer on claim progress 1 3 4 4 1 5

3.2.4 ‐ Respond to customer's requests for information 2 3 5 2 1 3 3.2.5 – Timeframe for making claim decision and notifying customer 4 2 6 1 1 3.3 ‐ Agree alternative timeframes & access to complaints process 1 13.4.4 – Timeframe for external expert to provide report 1 13.5.1 – Conduct claims handling in fair, transparent & timely manner 2 1 3 2 1 3

3.5.5(a) – Provide reasons for denial of claim in writing 1 1 3.5.5(b)(i) – Inform customer of right of access to information used to assess claim 94 94 12 12 3.5.5(b)(ii) – Inform customer of right to request review of access refusal 94 94 12 12 3.5.5(c) ‐ Provide customer with information about complaints handling procedures 1 1 3.7.1 ‐ Employees & Service Providers to conduct claims services honestly, efficiently, fairly & transparently 1 1 2 2 4

3.7.8 – Keep & make available Employees’ records 1 1 3.8(a) – Fast‐track claim 1 13.8(b) ‐ Make advance payment 3 33.11 ‐ Comply with ACCC & ASIC Debt Collection Guidelines 1 1 4 4 3.12(a) ‐ Extend repayment period & reduce payment amounts 2 2

3.12(b) ‐ Postpone payments 2 2 2 2 3.12 (c) ‐ Extend repayment period & postpone payments 1 1 2 2 3.13(a) ‐ Provide information about complaints handling procedures 4 4 4 4 3.13(b) ‐ Existence of FCA for a referral to free financial counselling service 2 2 1 1 TOTAL 221 12 241 53 8 61


Table 1C: Breaches of Sections 2, 4, 6 and 7 in 2013–14 & 2012–13 2013‐14 2012‐13Code Section Standard Significant TOTAL Standard Standard TOTAL BUYING 2.1.4 – Conduct sales process in a fair, honest & transparent manner 1 1 3 3 2.1.5(b) – Refer customer to another insurer/ICA/NIBA for alternative insurance 3 3 2.1.5(c) ‐ Information about complaints handling procedures 1 1 2.4.5 ‐ Adequate training of Employees & Authorised Representatives 1 1 1 1 2.4.6(a) ‐ Insurance & consumer law training for Employees & Authorised Representatives 1 1 2.4.6(c) ‐ Code training for Employees & Authorised Representatives 1 1 2.4.7 ‐ Keep & make available training records of Employees & Authorised Representatives 1 1 2.4.8(a) ‐ Monitor performance of Employees & Authorised Representatives 1 1 TOTAL 5 5 10 4 4

CATASTROPHES 4.3(a) ‐ Inform customer of entitlement to ask for a review of catastrophe property claim 2 1 3 4.3(b) ‐ Inform customer of complaints handling 2 1 3 TOTAL 4 2 6

INFORMATION & EDUCATION 5.4 ‐ Provide clear & accessible information about claims process, Code & complaints procedures 1 1 TOTAL 1 1

COMPLAINTS 6.1.1 ‐ Conduct of complaints handling in a fair, transparent and timely manner 2 2 8 8 6.1.2 ‐ Information about complaints handling procedures 2 1 3 6.2 ‐ Timeframe for response to complaint 1 1 6.6(c) ‐ Timeframe for response to dispute 1 1 6.9(c) ‐ Notify of timeframe to register dispute with EDR scheme 1 1 2 2 6.9(a) ‐ Give reasons for decision 1 1 6.9(b) ‐ Give information about how to access available EDR schemes 1 1 1 1 TOTAL 7 1 8 13 13

MONITORING & ENFORCEMENT 7.2(a) ‐ Systems and processes for compliance monitoring 1 1 TOTAL 1 1

GRAND TOTAL 17 9 26 13 4 17


1.4 Significant Breaches

A core element of the Code’s self-regulatory framework is providing a commitment to consumers that Code Participants will actively monitor their compliance with the Code and self-report significant breaches of their obligations to FOS. The Code defines these obligations in sections 7.2(a) and 7.3 respectively. To this end, the Code defines a breach as significant by reference to the following factors:

similar previous breaches

the adequacy of a Code Participant’s arrangements to ensure compliance with the Code

the extent of any consumer detriment, and

the duration of the breach.

We dealt with eight matters—including three new matters—involving 6 Code Participants and 21 significant Code breaches. We provided reports to the Committee in relation to six of the eight matters involving Code Participants 37, 97, 117 (Report 1), 128, 132 and 167 (Report 1). We have outlined the significant breaches in Table 1D and summarised each matter in Table 1E below.

We closed all eight matters on the basis that each Code Participant had appropriately rectified the significant breach or breaches, including remediation of consumer detriment.


Table 1D – Number & Types of Significant Breaches 2013‐14 Code ParticipantCode Section 117 128 132 167 37 97 TOTAL BUYING 2.1.4 ‐ Conduct sales process in a fair, honest & transparent manner 1 1 2.4.5 ‐ Adequate training of Employees & Authorised Representatives 1 1 2.4.6(a) – Insurance & consumer law training for Employees & Authorised Representatives 1 1 2.4.6(c) ‐ Code training for Employees & Authorised Representatives 1 1 2.4.8(a) ‐ Monitor performance Employees & Authorised Representatives 1 1 TOTAL 1 4 5 CLAIMS 3.1 ‐ Timeframe for making & notifying customer of claim (simple) decision 1 1 2 3.2.1(a) ‐ Notifying customer of information required to make claim decision 1 1 3.2.3 – Update customer on claim progress 3 3 3.2.4 ‐ Respond to customer's requests for information 3 3 3.2.5 – Timeframe for making claim decision and notifying customer 1 1 2 3.5.1 – Conduct claims handling in a fair, transparent & timely manner 1 1 TOTAL 2 6 1 3 12 CATASTROPHES 4.3(a) ‐ Inform customer of entitlement to ask for a review of catastropheproperty claim 1 1

4.3(b) ‐ Inform of complaints handling procedures 1 1 CATASTROPHES TOTAL 2 2 COMPLAINTS 6.1.2 ‐ Information about complaints handling procedures 1 1

TOTAL 1 1 MONITORING & ENFORCEMENT 7.2(a) ‐ Systems & processes for compliance monitoring 1 1

TOTAL 1 1

GRAND TOTAL 3 2 1 10 1 4 21


Table 1E – Summary of Significant Breaches in 2013–14 Note 1: “CP” means “Code Participant”

CP1 Code Section Nature of Significant Breach and Consumer Impact Other Corrective Actions Status 37 Section 3.5.1—Conduct

claims handling in a fair, transparent and timely manner

Who reported the significant breach: The Code Participant identified and reported this matter to FOS Code.

The Code Participant was unable to contact 6 of the 162 customers affected by this matter and donated $2,238.36 to a children’s charity.

Closed.

Nature of the significant breach: The Code Participant identified that it had failed to return claim excesses to 162 third party motor vehicle insurance customers where a third party demand had not been received. The cause of the significant breach was a gap in the Code Participant’s systems and processes to ensure excesses were refunded in all instances where required. The absence of a system prompt and a lack of clarity as to who should perform the task of updating the “fault” status on the claim file exacerbated the processing error. The Code Participant refunded the excesses to the affected customers and paid interest. The Code Participant reported a similar significant breach during 2012–2013. Its internal audit area had not identified third party motor vehicle insurance customers as a class of affected customers, during its investigation of the earlier matter. Consumer impact: The claims handling issue affected 162 customers. The Code Participant made total payments of $111,152.26 including interest to affected customers.

97 Section 3.1—Timeframe for

making and notifying Who reported the significant breach: The Code Participant identified and reported this matter to FOS Code.

The Code Participant recruited additional claims staff and seconded staff from other teams. Its compliance and

Closed.


CP1 Code Section Nature of Significant Breach and Consumer Impact Other Corrective Actions Status

customer of a claim [simple] decision Section 3.2.1(a)—Notifying customer of information required to make a claim decision Section 3.2.5—Timeframe for making and notifying customer of a claim decision Section 7.2(a)—Systems & processes for compliance monitoring

Nature of the significant breaches: Delays occurred in processing about 15% of the Code Participant’s travel insurance claims, including whether to accept or deny a claim in some instances. The delays were due to an unusual and unexpected increase in claims volume, which meant that existing staff resources were insufficient to meet demand. Although the relevant claims team was aware of the non‐compliance, it incorrectly concluded that the delays were cyclical and not widespread and further, that the issue could be resolved without assistance or oversight from the Code Participant’s risk and compliance team. As a result, there was a delay of nine months before the Code Participant’s risk and compliance area became aware of the issue.

quality assurance areas enhanced their monitoring of the relevant claims team’s activities. The Code Participant established increased oversight at all levels of management up to and including board level, which will remain in place for the near future: for example, its internal risk, compliance and audit committee continues to receive regular updates on claims performance. The relevant claims team has assurance processes in place, which assist in identifying files that have not been actioned within service standard timeframes. In addition, the Code Participant is examining continuous improvement of claims handling processes and has a strategic review of the business underway to assist in establishing longer‐term solutions.

Consumer impact: The claims handling issues affected at least 2700 customers.

117 Report One:

Section 6.1.2—Make available information about complaints handling procedures


The legal firm later realised that it had misinformed the customer and notified the Service Provider immediately. The Service Provider contacted the customer and informed him that the Code Participant’s internal complaints process was available to him. Lawyers at the legal firm were given refresher training on the Code Participant’s internal complaints process. The Code Participant continued to audit all new files allocated to the legal firm for a defined period. To determine whether other customers had been affected by the significant breach, the Code Participant reviewed all files that the Service Provider had referred to

Closed.

Nature of the significant breach: A lawyer employed by a legal firm used by a Service Provider, incorrectly informed a customer that if negotiations to settle a strata insurance claim failed, the Code Participant’s complaints handling procedures would not be available to the customer. Consumer impact: One customer was misinformed.



the legal firm. The file review established that only the one customer had been misinformed about the right to access the Code Participant’s complaints process.

117 Report Two:

Sections 4.3(a) & 4.3(b)—Inform customer of entitlement to ask for a review of catastrophe property claim & complaints handling procedures


To address this matter, the Code Participant identified all affected customers and wrote to each of them. The letter outlined customer entitlements and included an apology for the omission. The letter also noted that the six month timeframe applied from the date of the letter. The Code Participant updated its template document to ensure compliance with the standards. In addition, the Code Participant implemented more stringent review and sign off practices for the creation and updating of templates. The Code Participant also reviewed its complaints records and did not identify any instances where it had refused a customer’s request for a review of settlement terms.

Closed.

Nature of the significant breaches: Although the Code Participant had settled a number of commercial and personal property insurance claims that came within the scope of section 4.3, it failed to comply by:

Incorrectly informing customers that the timeframe for review of settlement terms was one month rather than six months.

Not providing information to customers about its complaints handling procedures.

The Code Participant established that after reviewing and updating all outbound documentation for a new claims management system, an error resulted in a change to the timeframe from six months to one month and removal of information about its complaints process. Consumer impact: The issue affected 392 customers.

128 Section 3.1—Timeframe for

making and notifying customer of a claim [simple] decision Section 3.2.5— Timeframe for making and notifying customer of a claim decision


The Code Participant increased staff numbers initially to address the backlog of claims correspondence. However, the increase in staff numbers did not have the expected effect of re‐establishing compliance with the relevant timeframes. Following discussions with FOS Code, the Code Participant reviewed its operating model. This led to improved claims handling efficiency and increased capacity. The Code

Closed.

Nature of the significant breaches: Delays occurred in determining liability in relation to about 9,330 (20%) of the Code Participant’s Home insurance claims, due to delays in processing incoming customer correspondence. The Code Participant identified that the non‐compliance began after it had experienced an unexpected and substantial increase in claims volumes because of a severe weather event. As a



result, staff resources were insufficient to meet demand. Participant also established a quick settlement and finalisation process for small claims with minimal evidentiary requirements. The changes made by the Code Participant resulted in a return to compliance with the Code’s timeframes. The Code Participant determined that it would pay interest in respect of cash settlements received by some customers, because the delays were unreasonable. As a result, the Code Participant made total payments of $11,615 in interest to 3,284 eligible customers. Prior to closure of this matter the Code Participant carried out a detailed claim file audit of 1500 files over a period of three months. The results of the audit demonstrated that the Code Participant had an ongoing capacity to comply with the relevant claims standards.

Consumer impact: The issues affected at least 9,930 customers. While all customers experienced delays, the Code Participant determined that 3,284 customers experienced unreasonable delays.

132 Section 2.1.4—Conduct the

sales process in a fair, honest & transparent manner

Who reported the significant breach: FOS Code identified and reported this matter.

The Code Participant identified all customers affected by the issue and returned $644,892 in overpaid premiums. The Code Participant repaired the technical fault in the policy system and audited the system to ensure it continued to operate effectively. It also introduced monthly monitoring of the system’s performance to prevent a recurrence of the issue. Further, the Code Participant amended its incident and breach policy to ensure that it fully documents deliberations concerning whether a matter has breached its Code obligations.

Closed.

Nature of the significant breach: The Code Participant was unaware that a new policy administration system had overcharged a number of customers renewing comprehensive motor vehicle policies. We identified this matter as a significant breach of the Code through information provided by the Code Participant as part of its annual compliance review. Although the information available to us showed that the Code Participant had fully rectified the matter and reported it to ASIC as a breach of its AFSL, it did not report this matter as a significant breach of the Code.



The Code Participant advised us that it had considered whether the issue was a breach of the Code, but had failed to document its deliberations. The Code Participant also advised that it had concluded it had not breached the Code because the cause of premium error was an IT failure. In characterizing the issue as an IT error, the Code Participant failed to consider the wider implications of overcharging customers entitled to premium discounts, as stated in product disclosure statements and other consumer material. Consumer impact: The policy renewal issue affected 6,651 customers and resulted in total refunds of $644,892.

167 Report One:

Section 2.4.5—Adequate training of Employees & Authorised Representatives 2.4.6(a)— Insurance & consumer law training for Employees & Authorised Representatives 2.4.6(c)— Code training for Employees & Authorised Representatives 2.4.8(a)— Monitor performance of Employees & Authorised Representatives

Who reported the significant breach: The Code Participant identified and reported this matter.

To ensure that there was no consumer detriment, the Code Participant reviewed its records, which established that there were no complaints or additional compliance breaches about the Authorised Representative. In addition, it reviewed all products sold by the Authorised Representative to confirm that all transactions had occurred within the scope of its authority. To improve timeframes around referral of an issue to the Code Participant’s internal breach committee (where required):

It extended access to its issue and incident system beyond executive management by including team members in relevant operational roles, such as quality assurance and risk & compliance.

Its risk & compliance team reviews all new entries in the issue and incident system on a weekly basis to enable early identification of potential compliance breaches and ensure that it records incidents brought

Closed.

Nature of the significant breaches: The Code Participant reported that it had failed to comply with its obligation to provide an Authorised Representative with training in relation to the Code, the principles of general insurance and consumer protection law. In addition, it had failed to monitor the Authorised Representative’s performance. The Authorised Representative had advised the Code Participant of its intention to terminate its arrangement with the Code Participant at some point in the future. However, the Code Participant ceased oversight of the Authorised Representative without establishing whether the arrangement was still in place.



The Code Participant also reported that there was a delay of four months between the date it first identified the issue and confirmation of a significant breach by its internal breach committee. The delay occurred due to changes in personnel and limited access to a newly launched risk management tool in the area that managed the relevant Authorised Representative.

to its attention through other means.

Where applicable, the Chief Risk Officer must refer a matter to the Code Participant’s internal breach committee within two days of becoming aware of it.

Consumer impact: The issue did not affect any consumers.

167 Report Two:

3 x Section 3.2.3—Update customer on claim progress 3 x Section 3.2.4—Respond to customer requests for information


The Code Participant recruited temporary and then permanent additional staff to clear the backlog. It implemented several mechanisms to monitor ongoing compliance with the Code across commercial claims services, including:

enhanced monthly reporting on claims activities, and

review of claim files.

Closed.

Nature of the significant breaches: Code Participant 167 reported these significant breaches following a merger. In the course of addressing the former Code Participants’ non‐compliance, the Code Participant determined that the breaches were significant in nature, due to the number of breaches and their duration as follows:

In relation to commercial motor and property claims during a period of 11 months there were up to: —7,295 breaches of section 3.2.3, and —6,495 breaches of section 3.2.4.

Delays outside of the relevant timeframes averaged up to 12 days in relation to section 3.2.3 and up to 3 days in relation to section 3.2.4.

The Code Participant identified that the non‐compliance occurred because some of the staff who handled business as usual claims were re‐directed to assist with the



management of claims arising from a severe weather event, pending recruitment and training of additional staff.

Consumer impact: The Code Participant reported that there were up to:

7,295 breaches of section 3.2.3, and 6,495 breaches of section 3.2.4. While there was no financial consumer detriment, customers experienced delays in receiving updates on claim progress and responses to request for information.


1.5 Breaches involving a lack of fairness, honesty or transparency

Several of the Code’s standards specifically require Code Participants, their employees, Authorised Representatives and service providers, to act in a fair, honest and transparent manner in providing their services to consumers. These standards appear in the following sections:

• Buying Insurance, Section 2—sections 2.1.4, 2.4.1

• Insurance Claims, Section 3—sections 3.5.1, 3.7.1, and

• Complaints Handling Procedures, Section 6—section 6.1.1.

Four breaches, including two significant breaches, were due to a failure to comply with the fairness or transparency requirements as follows:

• A significant breach of section 2.1.4:

The standard requires a Code Participant to conduct its sales process in a fair, honest & transparent manner. In this instance, we identified that Code Participant 132 had significantly breached section 2.1.4 due to a failure to apply available premium discounts to eligible customers. As a result, a number of customers were overcharged when renewing their insurance cover.

An error within the Code Participant’s policy administration system caused the breach,

which affected the calculation of renewal premiums for comprehensive motor vehicle insurance policies.

See Table 1E above.

• A significant breach of section 3.5.1:

A Code Participant is required to conduct claims handling in a fair, transparent and timely manner. Code Participant 37 reported that it had acted unfairly when it failed to return excesses paid by 162 third party motor vehicle insurance customers, in circumstances where a third party demand had not subsequently been received.

See Table 1E above.

• Breach of sections 3.5.1 and 3.7.1: These standards require a Code Participant to conduct claims handling in a fair, transparent and timely manner (section 3.5.1) and require employees and services providers to conduct their services in an honest, efficient, fair and transparent manner (section 3.7.1).

In this matter, a Code Participant made available a range of motor vehicle insurance Product Disclosure Statements (PDSs) to customers around Australia. The relevant PDSs included a replacement vehicle benefit if an insured vehicle was a total loss in specified circumstances.

As a result of our investigation, the Code Participant accepted that it had breached its Code obligations, because the relevant PDSs did not fairly and transparently explain


the method for determining whether an insured vehicle was a total loss with respect to the replacement vehicle benefit.

The Code Participant addressed this matter by amending the relevant PDSs to include

a definition of “Total Loss” to improve the transparency of the process.

1.6 Outcomes of Code Compliance Reviews (Desk top Audits)

We finalized 62 compliance reviews via desk top audit between 1 July 2013 and 30 June 2014. We were satisfied that 57 of the 62 Code Participants had appropriate processes and systems in place to facilitate their compliance with the Code.

We identified that the remaining five Code Participants did not comply with some aspects of their Code obligations. All five Code Participants failed to comply with the requirements of part (b) of section 3.5.5 and one of the Code Participants also failed to comply with section 4.3 and section 5.4.

The failure to comply with the requirements of section 3.5.5(b) affected 1,921 customers. Part of the rectification action undertaken by the relevant Code Participants consisted of contacting each of the affected customers and advising them of their additional rights.

We have summarized each of the matters in Table 1F below.


Table 1F: Non-compliant Code compliance review outcomes—2013–14 Code Participant (CP)

Breaches Nature of non‐compliance and consumer impact Corrective action

CP 30 1 x s3.5.5(b)(i) 1 x s3.5.5(b)(ii)

Who identified the breach: FOS Code identified the breaches through the compliance review.

The Code Participant implemented the following actions:

Informed all affected customers about their rights under section 3.5.5(b) in writing.

Amended its procedures manual, claim denial letter templates and complaints brochure to include the requirements of section 3.5.5(b).

Informed all relevant staff of the changes to its procedures. The Code Participant also reported that although it received a number of queries from affected customers about its communication, it did not receive any requests for copies of information further to section 3.5.5(b) entitlements.

Nature of breach: A number of customers were not adequately advised of the additional entitlements outlined in part (b) of s3.5.5 as follows:

A right to ask the Code Participant to provide copies of the information it relied on to deny the claim.

If the Code Participant refused to release the information, a right to ask it to review that decision.

The Code Participant believed that its procedures enabled it to meet its obligations. However, while the template document contained a reference to the Code Participant’s complaints processes, it did not provide any specific information about an entitlement to access information forming the basis of the decision to deny the claim. Consumer Impact: 1,830 customers did not receive information about the additional rights.

CP 63 6 x s3.5.5(b)(i)

6 x s3.5.5(b)(ii) Who identified the breach: FOS Code identified the breaches through the compliance review.


It wrote to each of the six customers about their section 3.5.5(b) rights and provided the relevant information and reports.

It amended its Procedures Manual and claim denial letter templates to include the requirements of section 3.5.5(b).

It informed all relevant staff of the changes to its procedures.

Nature of breach: The Code Participant did not have a procedure to ensure that when declining claims customers would also be advised of their entitlements outlined in part (b) of s3.5.5 as follows:




Consumer Impact: Six customers were not advised of the additional rights.

CP 94 1 x s3.5.5(b)(i)



It amended its procedures manual and claim denial letter templates to include the requirements of section 3.5.5(b).


Nature of breach: The Code Participant did not have a procedure to ensure that customers whose claims may be denied are also informed of the additional entitlements outlined in part (b) of s3.5.5 as follows:



Consumer Impact: No customers were affected by the breach because the Code Participant did not deny any claims during the period of non‐compliance.

CP 107 10 x s3.5.5(b)(i)



It wrote to each of the six customers about their rights under section 3.5.5(b).

It amended its Procedures Manual and claim denial letter templates to include the requirements of section 3.5.5(b).


Nature of breach The Code Participant did not have a procedure to ensure that customers whose claims may be denied are also informed of the additional entitlements outlined in part (b) of s3.5.5 as follows:




Consumer Impact: Ten customers did not receive the required information.

1 x s4.3(a) 1 x s4.3(b)

Who identified the breach: FOS Code identified the breaches through the compliance review.


It amended its Procedures Manual and claim denial letter templates to include the requirements of section 4.3.


Nature of breach: The Code Participant did not have a procedure to ensure that on finalisation of a property claim due to a catastrophe or disaster within one month of the event, it informed such customers of the following:

A right to ask the Code Participant to review their property claim within six months of finalisation, if they think the assessment was incomplete/inaccurate.

Information about the Code Participant’s complaints handling procedures.

Consumer Impact: No customers were affected by the breach because the Code Participant did not have any exposure to a catastrophe/disaster during the period of non‐compliance.

1 x 5.4 Who identified the breach: FOS Code identified the breaches through the compliance review.

It updated its website to show that it is a Code participant and provided a link to the Code.

Nature of breach: The Code Participant’s website did not contain information about the Code or that it participated in the General Insurance Code of Practice. Consumer Impact: No customers were affected by the breach because information about the Code and participation was available through other customer communications.

CP 150 75 x s3.5.5(b)(i)


The Code Participant implemented the following measures to address the non‐compliance:


Nature of breach: The Code Participant did not have a procedure to ensure that customers whose claims may be denied are also informed of the additional entitlements outlined in part (b) of s3.5.5 as follows:

A right to ask the Code Participant to provide copies of the

information it relied on to deny the claim.


The Code Participant had incorrectly concluded that the 2012 amendments to section 3.5.5 did not apply to it. As a result, it did not alter its claims procedures and claims denial template documents to include the information required by section 3.5.5(b).

Identified and notified all 75 affected customers in writing of its error and their rights under section 3.5.5(b).

Updated claims procedures and claim denial template documents to comply with the standards going forward.

Provided training on the changes to all claims staff. Incorporated section 3.5.5(b) into its quality assurance

framework.

Consumer Impact: 75 customers did not receive the required information.


1.7 Code Participants with Five or more Breaches

Table 1G below lists Code Participants who had breaches recorded in this reporting period including comparative data for each of them where applicable. The data shows that in 2013–2014 we recorded five or more breaches against Code Participants 56, 63, 72, 107, 145, 150 and 167.

Chart 1G: Code Participants—2013–14 & 2012–13

Code Participant 2013‐14 2012‐136 107 2 29 110 2 25 1 830 237 1 138 1447 4

56 7 657 2 663 1268 1

72 12 474 175 286 1

94 297 4 1107 23117 3 1128 2132 1 2135 4

138 1 2141 8145 17150 150167 22

TOTAL 267 78

Code Participant 56

We recorded seven breaches against Code Participant 56 during the reporting period, which arose from our investigation of three separate and unrelated matters:

Investigation one: We identified breaches of the complaints handling standards namely section 6.9(b) and (c). The Code Participant discovered that a staff member did not use the template document for a final decision letter. As a result, the final decision letter failed to inform the customer about the availability of external dispute resolution through FOS and the


timeframe for lodging a dispute with FOS. The Code Participant established that this was an isolated instance by conducting a review of a sample of final decision letters over a two year period.

The Code Participant addressed this matter by:

• Providing coaching to the relevant staff member about this matter and requiring her to complete refresher Code training.

• Reminding all internal dispute resolution staff about the role of FOS, the requirements of the Code and the importance of using templates for final decision letters.

• Conducting monthly audits of final decision letters to ensure templates are being used.

Investigation two: The second matter resulted in our identification of breaches of section 3.8(a) and (b) of the Code, which outline the standards that apply to customers in financial hardship. In this instance, Code Participant 56 failed to properly log, escalate and assess a customer’s request to consider her financial hardship, as required by its procedures. The Code Participant established that this was an isolated instance.

Investigation three: In the third matter we recorded breaches of sections 3.12(b), 3.12(c) and 3.13(a), which are some of the standards that apply to the recovery of money from third parties in financial hardship. The Code Participant confirmed that in this instance a staff member did not comply with its financial hardship procedures. As a result, the Code Participant did not respond in a timely manner to a third party’s request for financial hardship assistance in relation to a debt owed to the Code Participant.

The Code Participant subsequently waived the debt after reviewing the third party’s financial hardship application under its internal complaints process. It provided the relevant staff member with refresher training on its financial hardship processes. It also notified all staff in its recoveries and settlements area of this incident to reinforce the processes that should have been followed.

Code Participant 72

We recorded 12 breaches against Code Participant 72 during the reporting period, arising from five unrelated matters as follows:

• Three of the give investigations arose from referrals that we received from FOS EDR; one investigation was a direct referral of a breach allegation by a consumer; and the final investigation arose from a referral from a community legal centre.

• Three of the five investigations led to breaches of standards applicable to customer financial hardship and complaints handling.

• The remaining two investigations led to breaches of the claims handling standards.

The Code Participant appropriately addressed all 12 breaches. We were also satisfied that the matters were unrelated and not indicative of a wider compliance issue.


Code Participant 145

The Code Participant informed us that it had identified 17 breaches of the Code, as a result of a detailed audit of claims arising from a severe weather event. The breaches consisted of the following:

• Six breaches of section 3.2.1(a): The standard requires a Code Participant to notify a customer of the information required to make a decision on their claim within 10 business days of receiving the claim. The Code Participant reported that it had identified six instances where the standard had not been met because it considered that it may not have been made sufficiently clear to the customer what was required to progress the decision on the claim.

• Two breaches of section 3.2.1(b): Within 10 business days of receiving a claim, a Code Participant is required to appoint a loss assessor or loss adjuster if necessary. There were two instances where, due to error, the claims were not referred to a loss adjuster within 10 business days.

• Two breaches of section 3.2.2: The standard requires a Code Participant to notify a customer that it has appointed a loss assess or loss adjuster within five business days of the appointment. The Code Participant established in two matters that while the claimant was aware of the appointment of a Loss Adjuster, this did not occur within the required timeframe.

• One breach of section 3.2.4: A Code Participant is required to respond to routine requests for information within 10 business days. However, the Code Participant identified two claims where each customer was contacted outside the 10 business day timeframe as a result of error.

• One breach of section 3.4.4: A Code Participant is required to ask an external expert to provide their report within 12 weeks and if there is a delay, to notify the customer and keep them informed. The standards of section 3.4 apply only to specified classes of policies as defined by the Code.

In this instance, the Code Participant did not notify the customer of the delay in relation to the expert’s report.

• Two breaches of section 3.8(b): Where a customer has demonstrated financial hardship, and a Code Participant elects to make an advance payment to the customer, it must do so within five business days.

The Code Participant identified two claims where there was a failure to comply with section 3.8(b) of the Code.

In the first claim, an emergency advance payment was made to the customer by the eighth business day rather than within five business days.

In the second claim, although the Code Participant agreed to make an advance payment toward the replacement of damaged/lost contents, due to an error the payment was never processed. The Code Participant confirmed that it had settled the customer’s contents claim.

• Section 4.3(a) and (b): The standards of section 4.3 apply to property claims that arise from a catastrophe or disaster, finalized within one month of the event. On finalization


of such a claim, a Code Participant is required to notify a customer of their right to request a review of the settlement of the claim up to six months after finalization, and of its complaints process.

The Code Participant identified that it had failed to comply with sections 4.3(a) and (b) in one claim. The claim file showed that the customer’s claim was accepted and due to an oversight, the Code Participant did not send the appropriate settlement letter. After identifying the error, the Code Participant sent a letter to the customer setting out his review rights and contacted him by phone.

The Code Participant reported that it had considered whether the breaches were indicative of a significant breach of the Code and concluded that the breaches were not significant. We concurred in that view for the following reasons:

• The short duration of the breaches.

• The absence of similar previous breaches for this Code Participant.

• A review of the audit results supported a conclusion that the number of claims that may have been affected was very low.

• The outcome of a subsequent annual compliance review of the Code Participant demonstrated that it has adequate arrangements in place to facilitate and monitor its compliance with the Code.

Code Participant 167

Code Participant 167 reported 22 breaches, including 10 significant breaches. The significant breaches are summarised in Table 1E above. In addition, Code Participant 167 reported 12 breaches identified as being part of its responsibilities following a merger. We were satisfied that the 12 breaches were not significant in nature and that Code Participant 167 had addressed each of the breaches appropriately.

The 12 breaches consisted of the following:

Section 2.1.5—four breaches. A number of customers were referred to FOS for information about alternative insurance options, rather than to another insurer or ICA, as required by amendments to the Code in July 2012. The error affected 393 customers pre-merger and occurred because of a failure to update the relevant template documents and websites.

Code Participant 167 replaced pre-merger templates with amended templates. It also updated the website with the correct referral information. Customers who had contacted FOS for information about alternative insurance were referred to the ICA.

Section 3.1—three breaches; and section 3.2.5—three breaches. These standards require a Code Participant to make a decision whether to accept a claim and notify a customer of the decision within 10 business days of completing its assessment of the claim.

Code Participant 167 reported that pre-merger 1,743 former customers had experienced some delays in receiving notification of a claim decision. The non-compliance occurred because some claims staff were re-directed to assist with the


management of claims arising from a severe weather event, instead of business as usual. Backlogs occurred pending recruitment and training of additional resources.

The severe weather event was the same event that resulted in Code Participant 167 reporting significant breaches of sections 3.2.3 and 3.2.4—see Table 1E above.

Section 3.5.5(b)(i)—one breach; section 3.5.5(b)(ii)—one breach. When denying a claim, part (b) of section 3.5.5 requires a Code Participant to also notify a customer of their right to ask for copies of the information it relied on to deny the claim and if it refuses, a right to ask it to review that decision.

The non-compliance occurred because pre-merger template claim denial letters had not be updated to reflect the requirements of part (b) of the standard. Code Participant 167 provided updated template documents and blocked access to the old template documents.

Code Participants 63, 107 and 150

We recorded multiple breaches against Code Participants 63, 107 and 150. We identified the breaches through annual compliance reviews. These matters are summarised in Table 1F above.

Although we recorded two breaches against Code Participant 30, the breaches affected 1,830 customers. We also identified this matter through an annual compliance review of the Code Participant and a summary has been provided in Table 1F above.


2. Breaches by Location & Source - Year ending 30 June 2014

Table 2H describes the referral source and geographic location of breaches during this reporting period.

The majority of breaches were identified by us either through our annual compliance reviews or investigations of alleged breaches of the Code. Code Participants identified and reported 20% of breaches during the reporting period. The data also shows that breaches affected customers throughout Australia.

Table 2H: Breach Sources in 2013–14 and 2012–13

Source ACT NSW QLD VIC WAMultiple

states TOTAL

Code Participant 10 3 1 38 52

Customer 6 6

FOS Code 23 2 164 189

FOS EDR 1 7 5 2 15

Legal Centre 4 1 5

TOTAL 1 14 30 17 1 204 267


3. Breach Causes & Corrective Actions - Year ending 30 June 2014

3.1 Overall Breach Causes and Corrective Actions

Tables 3I and 3J below outline the various causes of breaches during this reporting period and the actions implemented by Code Participants to address them.

Table 3I shows that overall 150 breaches (56%) in this reporting period were due to misinterpretation of a Code standard and its application to the Code Participant’s business operations.

A further 48 instances of non-compliance (18%) occurred because Code Participants’ employees, Authorised Representatives and/or Service providers did not follow procedures.

Table 3I: Causes of Breaches in 2013–14

Cause Number

Technical error 1

Documents not checked for compliance 11

Inaccurate or unclear policy documentation 2

Inadequate procedure &/or system 4

Insufficient staff resources 17

Misinterpretation of Code standards 150

No procedure 34

Procedure not followed 48

TOTAL 267

The data in Table 3J shows that Code Participants rectified 56% of breaches (150) by giving information to affected customers and improving underlying procedures and/or systems. Code Participants relied on remedial training/training to correct a further 20% of breaches (53) in this reporting period.

In addition, Code Participants made payments to consumers as part of rectification measures in response to four breaches.

We discuss breach causes and corrective actions in further detail in parts 3.2 and 3.3 below.


Table 3J: Corrective Actions in response to Breaches in 2013–14

Corrective action Number

Improved monitoring and remedial training 2

Improved monitoring, procedure &/or system, and increased staff resources and remedial training

3

Improved monitoring, procedure &/or system, increased staff resources, payment to consumers and remedial training

2

Improved procedure &/or system 19

Improved procedure &/or system and payment to consumers 2

Improved procedure &/or system and information to consumers 13

Improved procedure &/or system, remedial training and information to consumers

23

Improved staff resources, procedure &/or system 9

Increased staff resources 6

Information to consumers 1

Information to consumers and improved procedure &/or system 150

Information to consumers and remedial training 6

Remedial training 27

Training provided 2

Updated policy documents 2

TOTAL 267

3.2 Causes and Corrective actions - Breaches of Sections 2, 4, 6 and 7

Table 3K below describes the causes and corrective actions in relation to the breaches of section 2, while Table 3L describes those relevant to breaches of sections 4, 6 and 7 during this reporting period.

The data shows that overall, 15 of the 26 breaches (58%) across sections 2, 4, 6 and 7 were due to employees and/or Authorised Representatives not following procedures underlying the services that they provided to consumers noting that:

Of the ten breaches of section 2, five were significant breaches and four of these were due to a failure to comply with established procedures.


All eight breaches of the complaints handling standards in section 6 were due to a failure to comply with established procedures, and one of these breaches was significant in nature.

The failure to comply with section 7.2(a) was a significant breach, caused by a failure to follow procedure.

The manner in which Code Participants addressed the 26 breaches varied, however improving procedures and/or systems was common to 16 of these breaches, noting that:

All ten breaches of section 2 standards included improving underlying procedures and/or systems.

Payments were made to consumers as part of the relevant Code Participant’s response to a significant breach of section 2.

For further information in relation to significant breaches please refer to part 1.4 above.

3.3 Causes and Corrective actions - Breaches of Section 3

We have outlined the causes and corrective actions in relation to the claims handling standards of section 3 in Table 3K below.

Misinterpretation of Code standard:

In this reporting period 150 of the 241 breaches of the Code’s claims handling standards were

directly due to one Code Participant’s misinterpretation of a new 2012 Code standard and its application to its business. Consequently, the relevant Code Participant did not amend its procedures and template documents relevant to the new obligation, which led to 75 customers not being fully apprised of their rights to appeal following claim denial. For further information, see part 1.6 above.

We encourage Code Participants to seek clarification from us where there is any doubt about how Code standards might apply to their particular business operations in practice. There is also a growing body of reference material available to Code Participants, which outlines and discusses Code compliance issues. This reference material may be found in the Committee’s

Annual Reports, our Annual Reports and through the exchange of information with the ICA’s Code Reference Group.

Procedures not followed:

A failure to follow established procedures contributed to 33 instances of non-compliance with the Code’s claims handling standards, including one significant breach.

In our view, in order to facilitate and maintain compliance with their Code obligations it is important that Code Participants:

• Provide ongoing and refresher training to employees and Authorised Representatives

about the procedures which facilitate compliance with the Code’s standards.

• Build key performance indicators based on applicable Code standards, into service level agreements with Authorised Representatives and Service Providers.

• Monitor the performance of employees, Authorised Representatives and Service Providers.


• Test new procedures or systems prior to launch and monitor post-implementation to ensure they are operating effectively and as expected.

• Provide feedback to employees, Authorised Representatives and Service Providers about the outcomes of internally identified incidents, including significant breaches and our compliance investigations.

For further information in relation to significant breaches please refer to part 1.4 above. No procedures:

During this reporting period, 32 breaches of the Code’s claims handling standards were caused by the absence of a procedure to support Code compliance. These breaches could have been avoided had the relevant Code Participants conducted a gap analysis of procedures against Code requirements, to ensure that Code obligations could be met. Gap analysis is an important tool when identifying areas that require amendment following the introduction of an amended or new Code, and also when a Code Participant reviews and updates existing procedures as part of its normal business operations.

Insufficient staff resources:

Insufficient staff resources contributed to 17 of the 241 claims handling breaches including 11 significant breaches. The relevant Code Participants experienced an unexpected influx of claims creating claims backlogs, which resulted in staff being unable to comply with the relevant Code standards. In a number of instances non-compliance occurred because some staff who handled business as usual claims, were redirected to assist in the management of catastrophe claims, pending recruitment and training of additional staff.


Approaches to rectification:

FOS Code does not close breaches or significant breaches until satisfied that all appropriate action has been taken to address the non-compliance, including consumer detriment. As a result, FOS Code encourages Code Participants to apply a variety of remedial action when addressing Code breaches.

Providing affected consumers with the correct or relevant information, either exclusively or together with improvements to procedures and/or remedial training, was used to address 187 claims handling breaches.

Remedial training was used exclusively in 23 instances of non-compliance with the Code’s

claims handling standards and also contributed to the rectification of 28 further instances.

Improving underlying procedures and/or systems was used exclusively or together with other measures to address 12 significant breaches of the claims handling standards, including payments to consumers in three instances.



Table 3K: Section 2—Breach causes and corrective actions 2013–2014

Causes Corrective Actions

Code Section Document not

checked

Inadequate procedure &/or

systemProcedure not

followed Technical Error

Improved procedure &/or

system

Improved procedure &/or

system and payment to consumers

BUYING

2.1.4 – Conduct sales process in a fair, honest & transparent manner 1 1

2.1.5(b) ‐ Refer customer to insurer/ICA/NIBA for alternative insurance 3 3

2.1.5(c) ‐ Information about complaints handling procedures 1 1

2.4.5 ‐ Adequate training of Employees & Authorised Representatives 1 1

2.4.6(a) – Insurance & consumer law training for Employees & Authorised Representatives 1 1

2.4.6(c) ‐ Code training Employees & Authorised Representatives 1 1

2.4.7 ‐ Keep & make available training records of Employees & Authorised Representatives 1 1

2.4.8(a) ‐ Monitor performance of Employees & Authorised Representatives 1 1

BUYING TOTAL 4 1 4 1 9 1


Table 3L: Sections 4, 6 & 7—Breach causes and corrective actions 2013–2014 Causes Corrective Actions

Code Section Documents not checked No procedure

Procedure not followed

Improved monitoring

and remedial training

Improved procedure

&/or system

Improved procedure

&/or system, remedial

training and information

to consumers

Information to consumers and

remedial training

Remedial training

CATASTROPHES

4.3(a) ‐ Inform customer of entitlement to ask for a review of catastrophe property claim 1 1 1

1 1 1

4.3(b) ‐ Inform customer of complaints handling procedures 1 1 1

1 1 1

CATASTROPHES TOTAL 2 2 2 2 2 2

INFORMATION & EDUCATION

5.4 ‐ Provide clear & accessible information about claims process, Code & complaints procedures 1 1

INFORMATION & EDUCATION TOTAL 1 1

COMPLAINTS

6.1.1 ‐ Conduct complaints handling in a fair, transparent and timely manner 2

1 1

6.1.2 ‐ Information about complaints handling procedures. 3

1 1 1

6.6(c) ‐ Timeframe for response to dispute 1 1

6.9 (c) ‐ Notify of timeframe to register dispute with EDR scheme 1

1

6.9(b) ‐ Give information about how to access available EDR schemes 1

1

COMPLAINTS TOTAL 8 1 1 2 4

MONITORING & ENFORCEMENT

7.2(a) ‐ Systems & processes for monitor compliance 1 1

MONITORING & ENFORCEMENT TOTAL 1 1


Table 3M: Section 3—Breach causes and corrective actions 2013–2014

Causes Corrective ActionsCode Section

Docum

ents not che

cked

Inaccurate or u

nclear policy do

cumen

tatio

n

Inad

equa

te procedu

re &/or system

Inad

equa

te procedu

re &/or system and

insufficient

staffresou

rces

Insufficient staff re

sources

Misinterpretatio

n of Cod

e stan

dard

No proced

ure

Proced

ure no

t followed

Improved

mon

itorin

g, procedu

re &/or system,

increased staff resou

rces and

remed

ial training

Improved

mon

itorin

g, procedu

re &/or system,

increased staff resou

rces, p

aymen

t to consum

ers an

d remed

ial training

Improved

procedu

re &/or system

Improved

procedu

re &/or system and

paymen

t to

consum

ers

Improved

procedu

re &/or system & inform

ation to

consum

ers

Improved

procedu

re &/or system, information to

consum

ersan

dremed

ialtraining

Improved

staff re

sources an

d proced

ure &/or system

Increased staff resou

rces

Inform

ation to con

sumers

Inform

ation to con

sumers an

d im

proved

procedu

re

&/or system

Inform

ation to con

sumers an

d remed

ial training

Remed

ial training

Training

provide

d

Upd

ate po

licy do

cumen

ts

CLAIMS

3.1 ‐ Timeframe for making & notifying customer of claim (simple) decision 1 4 1 1 3

3.2.1(a) ‐ Notify customer of information required to make claim decision 1 6 1 6

3.2.1(b) – Appointment of loss assessor/adjuster 2 2

3.2.1(c) ‐ Provide initial estimate of time required for claim decision 1 1

3.2.2 ‐ Appointment of loss assessor/adjuster/investigator 2 2

3.2.3 – Update customer on claim progress 3 1 3 1

3.2.4 – Respond to customer's 3 2 3 2


requests for information

3.2.5 ‐ Timeframe for making claim decision and notifying customer 1 4 1 1 1 3 1

3.3 ‐ Agree alternative timeframes & access to complaints process 1 1

3.4.4 ‐ Timeframe for external expert to provide report 1

1

3.5.1 – Conduct claims handling in a fair, transparent & timely manner 1 2 1 1 1

3.5.5(b)(i) ‐ Inform customer of right to access information used to assess claim 4 1 75 16 2 6 11 75

3.5.5(b)(ii) ‐ Inform customer of right to request a review if access declined 4 1 75 16 2 7 10 75

3.7.1 ‐ Employees & Service Providers to conduct claims services honestly, efficiently, fairly and transparently 1 1

3.7.8 ‐ Keep & make available Employees’ training records 1 1

3.8(a) ‐ Fast‐track claim 1 1

3.8(b) ‐ Make advance payment 3 1 2

3.11 ‐ Comply with ACCC & ASIC Debt Collection Guidelines 1 1

3.13(a) – Provided information about complaints handling procedures 4 1 1 1 1

3.12(b) ‐ Postpone payments 2 1 1

3.12 (c) ‐ Extend repayment period & postpone payments 1 1

3.13(a) – Provided information about complaints handling procedures 4 1 1 1 1

3.13(b) ‐ Provide information about FCA for a referral to free financial counselling 2 1 1

CLAIMS TOTAL 4 2 3 2 15 150 32 33 3 2 6 1 13 21 9 6 1 150 2 23 2 2


Schedule 3 - KPI Report for the period 1 June 2013 to 31 May 2014

A: CCC Response to a Report from FOS - Sections 7.13 – 7.23 of the Code

Sections 7.13 to 7.23 of the Code set out the obligations of the CCC in responding to a report from FOS of a failure by a Code member to correct a Code breach.

Number of reports received

Average business days to

meeting

Number of instances

exceeding 15 business days

(i) Within 15 business days of the receipt of an FOS report the CCC shall meet to consider the FOS report. 0 0 0

Number of findings


notification

Number of instances


(ii) If the CCC accepts the FOS findings it will notify the Chief Executive Officer (CEO) of the Code member in writing of the detailed findings within 5 business days. [Section 7.18(a)]

0 0 0


Number of reports received


meeting

Number of instances


(iii) Within 30 business days of the receipt of an aggregated data report pursuant to Section 7.9 of the Code, the CCC shall meet to consider the FOS aggregated data report.

4 5 0

[These timeframes include an allowance for any further enquiries that the CCC may wish to initiate and to consider the outcome of those enquiries.] [Section 7.15]

Number of findings Average business days to notification

Number of instances exceeding 15 business

days

(iv) If the CCC accepts the FOS aggregated data report, it will act upon any identified serious or systemic issue within 15 business days of the meeting at which the FOS aggregated data report was tabled.

0 0 0

Number of responses Average business days to make final

determination


days

(v) Within 10 business days of receiving the response from the Code subscriber's CEO, the CCC will consider the response and make a final determination.

0 0 0

[This time frame includes an allowance for a meeting between the CCC and the CEO should the CCC require it.] [Section 7.19]


Number of final determinations Average business

days to notify CEO Number of instances exceeding 5 business

days

(vi) Within 5 business days of the CCC making a final determination, it will notify the CEO of the Code subscriber in writing of its decision and any sanctions to be imposed.

0 0 0

[The CCC will need to consider whether sanctions will come into effect when the CEO receives the notice or following expiry of a reasonable period of time after the notice has been issued as the Code is silent on this point.]

B: Annual Report of the CCC - Clause 6.3 of the Deed Date Report Issued

On or before 1 October in each year, the CCC will prepare and give to the Insurance Council and FOS an Annual Report for the period ending on June 30 in that year.

30-Sep-13

Date Report Issued

Where the CCC wishes to report on an issue which is too urgent for reporting to be delayed until the publication of the Annual Report, a specific report will be prepared dealing with that issue within 15 business days of the meeting at which the issue was discussed.

Not Applicable


C: Complaints about the CCC - Clause 6.5 of the Deed Number of complaints Average business

days for reference to Chair


days

(i) The CCC will refer a complaint that the CCC has not acted in

accordance with its Charter or the Code, to the Chair of the CCC within 5 business days.

0 0 0

Number of complaints considered by Chair

Average business days for

recommendation to CCC

Number of instances


(ii) Within 15 business days of the Chair’s receipt of the complaint, the

Chair will consider and/or investigate the complaint, and make recommendations to the CCC in respect of what, if any, steps should be taken in respect of the complaint.

0 0 0

Number of complaints raising conflicts

Average business days for appointment

of independent person


days

(iii) If the Chair believes that the complaint raises issues which involve the

Chair or a member of the CCC in a conflict of interest then, within 5 days of reaching that conclusion, the Chair may appoint an independent person to consider and investigate and make recommendations to the CCC in

respect of the complaint. In this case the KPI’s in (ii), (iv) and (v) apply to

the independent person.

0 0 0


Number of complaints Average business days for advice to

complainant


days

(iv) The CCC will advise a complainant of its determination within 5

business days. 0 0 0

Number of reports for FOS & ICA

Average business days for report

following determination


days

(v) Should the Chair decide that it is appropriate to report the complaint

and its outcome to FOS and the Executive Director of the Insurance Council then the Chair should do so within 5 business days of the determination being reached.

0 0 0

D: Terms of Reference of FOS - Clause 6.6 of the Deed Number of requests

for provision of information

Average business

days for provision of information

Number of instances


If FOS requests the CCC to provide information relating to matters considered or being considered by the CCC which may be relevant to issues being considered by FOS, this information should be provided to the FOS within 10 business days.

0 0 0


E: Notice to FOS - Clause 4.2 of the CCC Charter Number of sanctioned determinations

Average business days for Board

notification


days

If the CCC determines to impose a sanction on a Code participant under clause 7.20 of the Code, the CCC should notify the Board of FOS of that fact and provide a description of the sanction within 5 business days.

0 0 0

F: Issues of significance - Clause 4.3 of the CCC Charter Number of systemic issue decisions

Average business days for provision of

information


days

If the CCC decides to provide to the Board of FOS general information in relation to any systemic issue of which it believes the Board of FOS should be made aware, then the CCC should do so within 5 business days.

0 0 0

G: Convening meetings - Clause 7.1 (b) of the CCC Charter Number of meetingsheld

The CCC must meet not less than four times a year.

4


Schedule 4 - List of Code Participants as at 30 June 2014

General Insurers

AAI Limited ACE Insurance Ltd AIG Australia Ltd

AIOI Nissay Dowa Insurance Company Australia Pty Limited

Allianz Australia Insurance Ltd Ansvar Insurance Ltd Assetinsure Pty Ltd Auto & General Insurance Company Ltd AVEA Insurance Ltd Calliden Insurance Ltd Catholic Church Insurance Ltd CGU Insurance Ltd Chubb Insurance Company of Australia Ltd Commonwealth Insurance Ltd Credicorp Insurance Pty Ltd Defence Service Homes Insurance Scheme FM Insurance Company Ltd Genworth Financial Mortgage Insurance Pty Ltd Great Lakes Re-insurance (UK) PLC Guild Insurance Ltd Hallmark General Insurance Company Ltd HBF Insurance Pty Ltd Insurance Australia Ltd Insurance Manufacturers of Australia Pty Ltd LawCover Insurance Pty Ltd Lloyd’s Australia Ltd3 Medical Insurance Australia Pty Ltd Mitsui Sumitomo Insurance Co Ltd MTA Insurance Ltd Mutual Community General Insurance Proprietary Ltd NIPPONKOA Insurance Company Ltd NTI Ltd OnePath General Insurance Pty Ltd

3 For participating coverholders and claims administrators see next page.

Progressive Direct Insurance Pty Ltd QBE Insurance (Australia) Ltd QBE Lenders’ Mortgage Insurance Ltd RAA Insurance Ltd RAC Insurance Pty Ltd RACQ Insurance Ltd RACT Insurance Pty Ltd Sompo Japan Insurance Inc Southern Cross Benefits Ltd St Andrew’s Insurance (Australia) Pty Ltd Sunderland Marine Mutual Insurance Company Ltd Swann Insurance (Aust) Pty Ltd Territory Insurance Office The Hollard Insurance Company Pty Ltd The Tokio Marine & Nichido Fire Insurance Co Ltd Virginia Surety Company Inc Wesfarmers General Insurance Ltd Westpac General Insurance Ltd XL Insurance Company Ltd Youi Pty Ltd Zurich Australian Insurance Ltd


Lloyd’s Australia Limited: Participating Coverholders and Third Party

Administrators AIS Insurance Brokers Pty Ltd Altiora Insurance Solutions Pty Ltd AON Risk Services Australia Ltd Arch Underwriting at Lloyd's (Australia) Pty Ltd ASR Underwriting Agencies Pty Ltd ATC Insurance Solutions Pty Ltd Austagencies Pty Ltd Australian Income Protection Pty Ltd Australis Group (Underwriting) Pty Ltd Austruck Insurance Pty Ltd Axis Underwriting Services Pty Ltd Beazley Underwriting Pty Ltd Bizcover Pty Ltd Blue Sky Insurance Pty Ltd Brooklyn Underwriting Pty Ltd Catlin Australia Pty Ltd Cemac Pty Ltd Cerberos Brokers Pty Ltd Cerberus Special Risks Pty Ltd Cheap Travel Insurance Pty Ltd Cinesure Pty Ltd Columbus Direct Travel Insurance Pty Ltd Corporate Services Network Pty Ltd Coverforce Underwriting Pty Ltd Coversure Pty Ltd Crawford & Company (Australia) Pty Ltd DCS Asia Pacific Pty Ltd DLA Piper Australia Dolphin Insurance Pty Ltd Dual Australia Pty Ltd East West Insurance Brokers Pty Ltd Edge Underwriting Pty Ltd Elkington Bishop Molieaux Brokers Pty Ltd4

Epsilon Underwriting Agencies Pty Ltd Fitton Insurance (Brokers) Australia Pty Ltd Freeman McMurrick Pty Ltd Gallagher Bassett Service Pty Ltd Glenowar Pty Ltd5

Go Unlimited Pty Limited Gow-Gates Insurance Brokers Pty Ltd

4 Trading as EBM Insurance Brokers 5 Trading as Fenton Green & Co

Guardian Underwriting Services Pty Ltd High Street Underwriting Agency Pty Ltd HQ Insurance Pty Limited HW Wood Australia Pty Ltd IBL Limited6 Insurance Advisernet Australia Pty Ltd Insurance Facilitators Pty Ltd Insure That Pty Ltd Ironshore Australia Pty Limited iSure Pty Ltd Jardine Lloyd Thompson Pty Ltd JMD Ross Insurance Brokers Pty Ltd JUA Underwriting Agency Pty Ltd Latitude Underwriting Pty Ltd Lawsons Underwriting Australasia Ltd Leisureinsure Australia Pty Ltd Logan Livestock Insurance Agency Pty Ltd London Australia Underwriting Pty Ltd Magic Millions Insurance Brokers Pty Ltd Manufactured Homes Insurance Agency Pty Ltd Marsh Pty Ltd Mecon Winsure Insurance Group Pty Ltd Millennium Underwriting Agencies Pty Ltd Miller & Associates Insurance Broking Pty Ltd Miramar Underwriting Agency Pty Ltd Mobius Underwriting Pty Ltd National Underwriting Agencies Pty Ltd Nautilus Marine Insurance Agency Pty Ltd Newmarket Insurance Brokers Pty Ltd Nova Underwriting Pty Ltd Offshore Market Placements Limited Online Insurance Brokers Pty Ltd Pacific Underwriting Corporation Pty Ltd Panoptic Underwriting Pty Ltd Pantaenius Australia Pty Ltd

6 Trading as Planned Professional Risks Underwriting Agency


Parmia Pty Ltd Proclaim Management Solutions Pty Ltd Professional Risk Underwriting Pty Ltd QBE European Underwriting Services (Australia) Pty Limited7 QBE Placement Solutions Pty Ltd Resource Underwriting Pacific Pty Ltd Richard Oliver Underwriting Managers Pty Ltd Savannah Insurance Agency Pty Ltd SLE Worldwide Australia Pty Ltd Specialist Underwriting Agencies Pty Ltd Sportscover Australia Pty Ltd SRS Underwriting Agency Pty Ltd Starr Underwriting Agents (Asia) Ltd Sterling Insurances Pty Ltd SureSave Pty Ltd Tasman Underwriting Pty Ltd Travel Insurance Direct Pty Ltd Trident Insurance Group Pty Ltd Trinity Pacific Underwriting Agencies Pty Ltd Windsor Income Protection Pty Ltd Woodina Underwriting Agency Pty Ltd World Nomads Group Ltd

7 Trading as QBE 386


11 APPENDICES TO THE REPORT

Appendix 1 – History of the General Insurance Code of Practice

YEAR ACTIVITY

1994 The Insurance Council of Australia (ICA) introduced the first General Insurance Code of Practice (the Code).

1998 The Code was independently reviewed.

2005 The Code was revised and a new Code was launched by the ICA on 1 July 2005. Code Participants had 12 months to transition to the new Code.

2006 The new 2005 Code became operational on 1 July 2006.

2009 The 2005 Code was independently reviewed leading to 10 recommendations, including proposed amendments.

2010 The 2005 Code was amended with effect from 1 May 2010.

2012

In February 2012 the ICA enhanced the claims handling standards of section 3 and removed section 4.3 which related to the application of Code standards during catastrophes and disasters. The amendments became operational on 1 July 2012.

2012‐2013

The 2012 Code was independently reviewed. The Independent Reviewer made 60 recommendations including a new governance framework, enhanced financial hardship standards and a focus on retail consumers.

2014 The ICA released a new Code in February 2014 and officially launched it on 1 July 2014. Code Participants have 12 months to transition to the new Code.

2015 The new 2014 Code will become operational on 1 July 2015.


Appendix 2 - Past Members of the Code Compliance Committee

Code Compliance Committee – (1995 General Insurance Code of Practice, amended

version released in 2000):

Michael Gill Chair

Alan Mason (from ICA) Industry Representative

Adrian Evans Consumer Representative

Michael Gill Chair

Robert Drummond (from ICA) Industry Representative

Denis Nelthorpe Consumer Representative

Code Compliance Committee – (2006 General Insurance Code of Practice, amended versions released in 2010 and 2012):

Michael Gill Chair

John Driscoll (from ICA) Industry Representative

Denis Nelthorpe Consumer Representative

Michael Gill Chair

John Anning (from ICA) Industry Representative

Peter Gartlan Consumer Representative

Code Compliance Committee 30 June 2014:

Michael Gill Chair

John Anning (from ICA) Industry Representative

Julie Maron Consumer Representative

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