Industry body releases delayed Fair Insurance Code

by Maryvonne Gray 04 Feb 2015

Industry body releases delayed Fair Insurance Code

Insurance Council of New Zealand (ICNZ) CEO Tim Grafton says while the latest revised Fair Insurance Code is way overdue, he is happy with the results and proud of members’ efforts to produce a superior version.

The Code is required to be reviewed every three years, with the last revision being in 2010, but various problems arising out of the Canterbury earthquake experiences had highlighted a number of areas that needed a completely new approach.

“I was really proud of the ICNZ board because when we went into this process they said ‘Look, we’ve got to get into a position where we feel somewhat uncomfortable as insurers,’ so it’s bending over to assist the public and SMEs by setting higher benchmarks of service,” Grafton said.

“The process required a lot of discussion with members, we worked with a sub-committee of the board over 2-3 months in mid to late last year then we settled on the wording for the code and took it back to members. And there’s still things we have to confirm at the AGM meeting in March.”

The review process began at the end of 2013, with submissions closing in March last year and the new Code being released today.

However it still won’t come into effect until 1 January 2016 in order to give members time to adapt their systems and processes accordingly.

“We would have preferred to have things in sooner but you really have got to get things right,” Grafton said.

The new systems refer in the main part to setting higher standards of service, not just in the claims arena, and introducing best-practice timeframes for communicating with the insured at claim time.
The timeframes are:
  • A claim or complaint is to be acknowledged within 5 days
  • A determination on the claim or complaint is to be made within 10 days, unless complexities arise or information is required from third parties which may take longer, in which case
  • Insureds will be updated at least once every 20 business days, or agreed interval, until the claim is resolved.
“We’re in a very customer-centric world and increasingly so,” said Grafton, “so we looked around to see what were best practice time frames and we landed on these.

“Certainly you get into situations where if you don’t hear anything, that level of uncertainty can cause undue stress for the insured so that’s not desirable. So our members are supportive of making this shift, which is somewhat overdue in my view.”

A Code Compliance Committee comprising of independent, experts with a high level of integrity will be appointed to investigate significant breaches of the Code, with sanctions ranging from a fine to expulsion from ICNZ.

“The number of breaches will be reported publicly to add a further level of accountability,” he said.
The issue of non-disclosure was also identified from the submissions filed.

“This just makes it quite explicit that the requirement is to respond reasonably to non-disclosure. In our view that’s where it’s needed more than anywhere else, rather than having extensive key lists which probably don’t help the insured.”

Insurers working in Canterbury who established a vulnerability index to prioritise the most vulnerable in the recovery process have inspired the Code committee to make it a mandatory requirement for all member insurers during a catastrophe.

The Hon David Caygill, who was the independent peer reviewer of the process, found the Code to respond fairly and comprehensively to the submissions the Council received, with the amendments a considerable improvement.

With increased training of staff on the Code planned, Grafton said ICNZ members could use it as a point of difference over non-member insurers.

“I’d like to see ICNZ members market themselves as subscribing to the Code so for the public making a choice between an ICNZ member or not they can have a higher level of surety of service than otherwise.

“I’m really happy that we’ve landed, I think, in a very credible position that has made some substantial changes for the better, to be more responsive to the insured, and to make it a clearer Code around commitments that our members make to the insured. I think it will engender greater trust and confidence in our members which has got to be a good thing.”

Read the full code here.