Life code reviewer Peter Kell today released his interim findings, with mental health and claims handling among matters on which he is seeking more stakeholder feedback.

Submissions are also sought by May 8 on the interim report’s proposals on internal dispute resolution processes, disclosure of premium changes and sales practices.

Another set of proposals relate to code sanctions. At present, the code compliance committee can hit an insurer with a community benefit payment of up to $100,000 for significant breaches, but there are restrictions. For example, a sanction should not be applied when the breach has been reported or is reportable to the Australian Securities and Investments Commission.

The report says the restrictions “reduce the effectiveness of the [community benefit payment] framework and should be removed”.

Mr Kell has also recommended that the code compliance committee be allowed to name insurers involved in inquiries without attributing specific data or outcomes to individual entities.

“An important role for the [committee] is to undertake reviews and inquiries into industry compliance with certain code commitments,” the report says. “At present, [it] cannot identify insurers in inquiry reports (except where providing an example of good practice).”

The report says the Council of Australian Life Insurers provided a supplementary submission last month on mental health, including the industry’s preferred position.

“This would involve amending the code to allow product design features that limit cover for mental health conditions in standard form contracts without individual underwriting, rather than prohibiting blanket exclusions altogether in standard form contracts,” the report says.

CALI also recommended that life insurers’ commitment to comply with the Disability Discrimination Act, which was in the 2017 code, should be reinstated.

The report says reinstatement “would mean that exclusions or limitations would be allowed if there is relevant supporting evidence. This is, in effect, a step back from the current commitment that goes beyond the requirements of the [act].

“The industry position is based on a strong view that it will be financially unsustainable to deal with the growth and prevalence of mental health claims solely through individual underwriting decisions.”

CALI provided data that indicates “mental health is now the number one reason why Australians are turning to life insurers to claim when they are permanently unable to work”, the report says.

A final report will be provided to CALI by June 30. The peak body owns the code and appointed Mr Kell last year to review it.