The Insurance Council of Australia says submissions published today on the code of practice redraft show the complexity of issues under consideration, and include a broad range of views.

Some of the 28 submissions published on the ICA website have previously been released by individual organisations, while two remain confidential.

The National Insurance Brokers Association submission says a redrafted definition of wholesale insurance that has the practical effect of reducing protection is its most significant concern.

The new definition excludes business interruption; contractors all risks; fidelity guarantee; legal liability including public and product liability; professional indemnity including management liability, directors and officers, and tax audit insurance; cyber; and industrial special risks.

“They are neither retail insurance nor wholesale insurance as redefined, and no part of the code applies to a product that is neither,” NIBA says.

“This is a move from limited but real code coverage to none.”

The Underwriting Agencies Council says it does not agree with the “wide net of the code’s proposed contractual enforceability”, which could increase exposure to vexatious or frivolous litigation over technical or minor breaches.

A probable inflationary effect arising from a heavier compliance burden could lead to increased premiums when affordability is a critical issue, it adds.

UAC suggests limiting contractual enforceability to code aspects that are clear, certain and objectively measurable, and where breaches would be considered significant.

The group also raises concerns about the subjective nature of vulnerability assessments, and practical difficulties in circumstances where issues are not disclosed or readily apparent. It suggests a phased approach to allow more effective implementation and to reduce the risk of inconsistent application.

“Certain vulnerability-related obligations may be better suited to be situated within the ICA’s non-binding vulnerability guidance, at least during an initial implementation period,” it says.

ICA says it expects to submit the revised code to the Australian Securities and Investments Commission for approval later this year.

“The Insurance Council is carefully considering the feedback to ensure changes to the code deliver meaningful benefits while avoiding unintended consequences for consumer outcomes, pricing and market competition,” it says.

The peak body also continues to work with government, regulators and consumer stakeholders on reforms that fall outside the code’s remit, including pricing transparency, affordability and further consumer safeguards, it says.

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From the latest Insurance News magazine: Why some stakeholders reckon insurers' redrafted code of practice falls 'far short' of what is needed to protect customers

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