Self-Regulation is Failing – Time for Government to Take Over the Insurance Code

The Australian Consumers Insurance Lobby (ACIL) has slammed the Insurance Council of Australia’s (ICA) response to the General Insurance Code of Practice review, stating that self-regulation in the insurance industry is failing consumers. With insurers cherry-picking recommendations and refusing to adopt key reforms from its own independent reviews and government inquiries, ACIL believes the government must now consider taking control of the Code.

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ACIL Code of Practice (Self Regulation is Failing) Final.pdf

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“The blatant disregard for independent review recommendations and findings from government inquiries is yet another example of the industry behaving poorly,” said Tyrone Shandiman, Chair of ACIL. “The insurance industry should not be dictated to by insurers—it must work for consumers.”

ACIL has highlighted three critical areas where the industry response is inadequate and harmful to policyholders:

• Expert Reports – Insurers continue to rely on biased expert reports to deny claims, yet there is no clear timeline for finalising the Use of Expert Reports: Industry Best Practice Standard. Without enforceable rules, insurers will continue using conflicted experts to support claim denials.

• Cash Settlements – Insurers have sidestepped recommendations to ensure fairer cash settlements, leaving consumers at risk of underpaid claims that fail to cover the true cost of repairs.

• Vulnerability Protections – While insurers claim to support a Vulnerability Framework, there is no clear timeline for completion or commitment to enforceable obligations. This leaves vulnerable consumers at risk of inadequate support when they need it most.

In addition to these critical issues, insurers continue pricing practices that are detrimental to consumers (C-89 & C-88), including charging more for instalment payments and offering higher renewal quotes than those available to new customers.  They have rejected calls to guarantee temporary accommodation until claims are finalised (PFI-10 & C-69), refused to offer fairer premiums during claims delays (PFI-60), and opposed flexibility in rebuilds (PFI-26) despite pushing for $30b of government resilience funding. Insurers also refuse to make the Code contractually enforceable (PFI-47), weakening accountability.

Despite rejecting these critical reforms, insurers now want ASIC to sign off on the Code of Practice, despite failing to implement key recommendations. “How can ASIC endorse a Code where insurers have ignored their own independent recommendations without a rigorous process to justify these decisions?” said Shandiman.

ACIL is urging the Insurance Council of Australia to reconsider its response and commit to meaningful reforms. “If insurers refuse to act in the interests of consumers, we will actively lobby for a government takeover of the Code to ensure policyholders receive the fairness and protection they deserve,” Shandiman said.