A voluntary code of conduct is not good enough for insurance within superannuation, according to the Australian Lawyers Alliance (ALA).
The ALA has called for an enforceable Code of Practice to regulate the conduct of both the insurance and superannuation industries, overseen by the Australian Securities and Investments Commission (ASIC).
In its submission to the Senate Economics Committee inquiry into consumer protection in the banking, insurance and financial sector the ALA said the many examples of poor claims handling had eroded public confidence in the insurance industry “such that a self-regulated code would be insufficient, and would represent a wasted opportunity to effect genuine change”.
It said the proposed code should ensure that the insurance and superannuation industries operated in an ethical and fair manner.
“It should be developed through an open and transparent process, involving genuine consultation with both community representatives and industry groups,” it said.
The ALA argued that ASIC was the appropriate regulator, adding that it was essential that “ASIC’s resources are sufficient to ensure it is capable of providing genuine and effective oversight”.
“At a minimum, ASIC supervision should cover total and permanent disability insurance, income protection, terminal illness, death and trauma claims,” it said.