Of the 85 recommendations put to Australia's life insurers by the independent review of the Life Insurance Code of Practice (Life Code), only one was neither accepted nor deferred. It asked the industry to review whether the Code should carry a larger set of standard medical definitions. The Council of Australian Life Insurers (CALI) declined and said so plainly.
"Our view is that there isn't sufficient evidence today that we need to do that," CEO Christine Cupitt (pictured) told Insurance Business.
Cupitt said the industry weighed committing to a review it expected would conclude that no further definitions were needed and decided against it.
Standard medical definitions fix the contractual threshold at which a condition triggers a claim. Where the Code standardises a definition, the wording sits consistently across products in the market. That set stays as it is and the industry has said why rather than leaving the question circulating.
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The same logic shapes the rest of the response, published last week. CALI commissioned the review itself, led by Peter Kell, a former deputy chair of the Australian Securities and Investments Commission (ASIC). Cupitt was direct about what that obliges the industry to do.
"And we initiated it to hear from our stakeholders, customers and opened ourselves up to scrutiny," she said.
More than half the recommendations were accepted outright and they concentrate on the claims process.
"And we'll be making sure that through claim time, customers have access to a real contact person so that they don't have to repeat their circumstances and their story," Cupitt said.
That addresses a documented weak point. The Life Insurance Code Compliance Committee's 2024-25 Annual Industry Data and Compliance Report, released in May, recorded increases in breaches relating to the timely payment of income protection benefits and to timely initial claims communication, against a fall in overall breach numbers. The full picture appears in reporting on the latest life insurance code breach and compliance figures.
Mental health commitments also move out of an annexure and into the main body of the Code. Cupitt presented the relocation as a matter of how readily those commitments can be found, rather than a change in what they require and said CALI will produce a plain-English guide covering what must be disclosed when applying for cover.
The oversight machinery changes in the same tranche. The Life Code Compliance Committee's (Life CCC) financial sanction becomes available in circumstances where it is currently closed off.
"At the moment, those penalties wouldn't apply if the breach has also been reported to ASIC, whereas now it's open to the committee to apply a community benefit payment even if the breach has been reported to ASIC," Cupitt said.
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The committee will also be able to name insurers involved in its independent inquiries, a change Cupitt was careful not to characterise as punitive, describing it as a transparency measure within the review process. The committee's willingness to act on individual insurers is already on record, including the sanction examined in coverage of the Life CCC action over a months-long claims backlog.
Where the industry was not yet confident it could implement a recommendation well, it did not accept it. Four areas went to priority work streams: mental health, claims handling, First Nations access and funeral insurance. Nine recommendations covering claims decision timeframes and update obligations sit in that group rather than among the confirmed changes.
Cupitt said the work streams exist to interrogate how recommendations can be implemented, with customer perspectives, research and legal advice brought in before positions are finalised. On the First Nations recommendations, she said the aim is direct engagement with First Nations representatives so that implementation is culturally safe.
Mental health is the largest unresolved block. One change is confirmed: standard-form disability contracts can no longer exclude cover for all mental health conditions. Caps, waiting periods, eligibility criteria and individual underwriting options remain available to insurers, and recommendations on supporting any limitation with actuarial data remain in the work stream.
The pressure behind that is set out in CALI's own data. In a July 2025 release drawing on the CALI-KPMG Cause of Claims Results report, CALI said mental ill-health had become the leading cause of total and permanent disability claims in Australia, accounting for almost one in three claims paid, with more than $2.2 billion paid in mental health claims in 2024. What that is doing to product design is examined in analysis of how mental health claims are reshaping life insurance cover{target="_blank"}.
Cupitt put the response in its place in the sequence.
"We've taken 90 days to come up with the initial positions on those, but the work is not done," she said.
Drafting of the updated Code now runs alongside the work streams, which conclude in the first half of 2027.
