Fair Insurance Code
Good afternoon everyone. Having just returned from a week in Invercargill, I did have time to catch up with some reading. One recent item which I was aware of being a recent development within my world of the insurance industry is about to be implemented by The Insurance Council of New Zealand (ICNZ). A revised Fair Insurance Code has been released in February & the code is binding from January 1st 2016.
The key changes include:
The earthquakes in Canterbury & some of the claims there have obviously reinforced the need for a review. However, I would have to add, with the many mergers & restructuring within insurance companies, a review of such practice was in my view probably well overdue in any event.
- Insurers communicating more effectively with their clients, the insured; particularly concerning upfront disclosure of key information.
- Committing to act reasonably when faced with non-disclosure of relevant information by the insured.
- Introducing best-practice time frames for communicating with the insured at claim time.
- Training staff & agents about the code so they can also fulfill their responsibilities.
Many enhancements to the code reflect practices already in place, so nothing much has really changed. However, some changes require systems work so the obligations are applied & communicated consistently. Regretfully, this is something we are often following up with insurers on behalf of our clients, especially at claim time.
Complying consistently with the standards in the code will help provide reassurance for customers. Some clients, especially in Christchurch may suggest, ‘it is about time’! Time frames contained in the code include:
The code is a high-level set of responsibilities both insurers & an insured have toward each other. This is one reason we contact you, our clients every year, typically before renewals to discuss any changes which have occurred which become material facts & require advising our insurer under Duty of Disclosure requirements.
- A claim or complaint is to be acknowledge within five days. Regretfully, this does not always occur & some delays we come across are just inexcusable.
- A determination on the claim or complaint is to be made within 10 days, unless complexities arise or information is required from third parties, which may take longer. In this case, insureds will be updated at least once every 20 business days, or agreed interval, until the claim is resolved. I really do look forward to this happening, if insurers can actually implement these promises… I suspect this will be a huge challenge for many of them.
- The new code addresses issues arising from the Canterbury experience; the previous code did not take catastrophe situations into account.
Issues around non-disclosure were identified as a concern for submissions to the code review. Currently, insurers can ‘avoid’ a policy if the insured fails to tell an insurer something important, however innocently it may have happened. The code now makes it a requirement to respond reasonably to non-disclosure issues.
The ICNZ has established a Code Compliance Committee where the focus will be on putting things right for the insured & sanctions for major breaches; with the number of breaches reported publicly to add a further level of accountability. This is something we can all look forward to one would hope & certainly an improvement in many areas of past performance.
Any concerns you may have in this area with insurers, or enquiries other people you may know may have discussed with you, please feel free to contact me to ascertain if we can assist further.
As the winter approached, best wishes for the forthcoming season. Keep warm.