The redrafted industry code of practice risks being rejected by the corporate regulator, the General Insurance Code Governance Committee has warned.

The oversight committee says proposed changes weaken consumer protections despite the introduction of contractual enforceability and “several important new commitments” such as higher standards for expert reports.

It has made 10 “priority” recommendations to address the most significant issues in the redrafted general insurance code, including preserving the committee’s investigation powers; keeping independent interpretation of the code; and strengthening accountability for third parties. The committee also wants greater protection for small businesses and the new code to start “as soon as reasonably practicable”, instead of in 24 months as planned.

“At a minimum, the [Insurance Council of Australia] should adopt the committee’s priority recommendations,” the code committee said in a submission.

“Without these changes, the code would not meet community expectations or reflect best practice and will be a step back from current commitments.”

The committee added: “The proposed governance arrangements may not meet [ASIC’s] requirements for an approved code, placing approval of the code at risk.”

Consultation on the redraft closed last month and ICA plans to lodge the updated code with ASIC for approval in late October.

The Unit Owners Association of Queensland has also raised concerns about the proposed changes.

The current code commits insurers to trust, integrity, fairness, respect and meeting community expectations, but these have been removed from the redraft, according to the association.

“The proposed 2026 code appears to weaken protections in a market where consumers already have limited choice, little bargaining power and rapidly escalating costs,” the association said.

“It signals that the industry is failing to adequately honour its community responsibilities, social licence, and moral obligation to provide fair and accessible residential strata insurance products.”

Financial Counselling Victoria says the redraft does not consistently strengthen consumer protections and, in some respects, represents a step backwards from the current code.

“Throughout the draft, mandatory obligations have frequently been replaced with broader principles or discretionary language,” Financial Counselling Victoria said in a submission.

“While flexibility has an important role in allowing insurers to respond to individual circumstances, it should not come at the expense of certainty for consumers.”