Life insurers reported 10,697 breaches of the Life Insurance Code of Practice affecting 27,289 customers during the 2025-26 financial year, according to the Life Code Compliance Committee’s (Life CCC) annual report released this week.
Claims handling, benefit payment delays, customer communication, and complaints management were the most common areas of non-compliance. The committee flagged them as recurring problems across the industry.
The Life CCC sanctioned two insurers for serious non-compliance during the year.
One insurer recorded 358 breaches of claims handling commitments. Some customers experienced delays of more than eight months, and the insurer paid more than $160,000 in interest to over 100 eligible customers. The committee issued a formal warning and required an independent audit.
The second insurer was sanctioned for collecting medical information without valid consent from more than 2,000 customers.
The Life CCC does not publicly name sanctioned insurers. For brokers and financial advisers who place life insurance on behalf of clients, this is a blind spot with real consequences. Without knowing which insurers attracted sanctions, intermediaries have no way to factor compliance performance into product recommendations or warn clients already holding policies with a sanctioned provider.
Brokers placing new life cover or reviewing existing arrangements may want to press insurers directly on their compliance record, including whether they have self-reported any significant breaches to the Life CCC.
Jan McClelland AM, chair of the Life Code Compliance Committee in Australia, said the committee’s role went beyond identifying a breach. “Sanctions impose formal consequences for serious breaches, but an equally important part of our role is making sure insurers address what went wrong, put things right for customers and strengthen their practices,” McClelland said.
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Claims accounted for 69% of the 111 allegations the committee finalised during the year. The Life CCC has commenced a dedicated claims handling inquiry and expects to publish its findings in 2026-27.
“Claims remain an important priority because delays, communication, and complaints arise at a time when customers are often relying most heavily on the protection their insurance provides,” McClelland said.
For brokers managing clients through the claims process, the data points to specific areas to watch. Benefit payment delays, poor communication during claims, and complaints handling were the most common failures. Brokers who actively track claim milestones and escalate delays early may be better placed to hold insurers to their Code commitments on behalf of clients.
The committee reviewed 14 significant breaches reported by insurers and completed three follow-up reviews of previous matters. In each follow-up case, the insurer had completed agreed remediation. Average investigation time for allegations fell from 12 months to seven.
Data from the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) covering the 12 months to December 2025 shows the claims acceptance rate for individually advised death cover sits at 97% but drops to 82% for total and permanent disability (TPD) policies. Dispute lodgement rates were highest for disability income cover, at 315 disputes per 100,000 lives insured for individually advised policies.
The compliance data adds to a broader complaints trend. The Australian Financial Complaints Authority (AFCA) received a record 119,949 complaints across all financial services in 2025-26, the third consecutive year above 100,000.
The committee’s inquiry into mental health underwriting, published in September 2025, found some insurers were applying broad exclusions rather than conducting individualised assessments for applicants with mental health conditions.
For brokers advising clients with mental health histories, the finding raises a practical question: are those clients receiving fair consideration at underwriting, or are they being excluded from cover that a more tailored assessment could have provided? Brokers may need to challenge blanket exclusions and request that insurers document why an individualised assessment was not conducted.
The Council of Australian Life Insurers (CALI) committed in October 2025 to developing a new assessment framework for mental health claims over 12 months. CALI described mental health conditions as the fastest-growing cause of life insurance claims.
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The Life CCC contributed evidence to the independent review of the Life Insurance Code, led by Peter Kell, which delivered its final report in June 2026 with 85 recommendations.
Among the proposed changes outlined in the interim report are a requirement for written reasons when cover is declined or non-standard mental health terms are offered, a shorter initial information request period, and a requirement that all claimants be assigned a human primary contact, according to a King & Wood Mallesons analysis of the review.
CALI said the industry is considering the recommendations. For brokers and advisers, the new Code could change how claims are processed, what information clients receive when cover is declined, and how complaints are handled. Intermediaries who familiarise themselves with the proposed changes now will be better positioned to advocate for clients once the new Code takes effect.
