Stronger Insurance Code Moves Closer to Approval

The most significant change is the proposed move from an industry standard with governance oversight to one where key obligations are incorporated into consumer insurance contracts. In practical terms, that could give customers clearer contractual pathways where a subscribing insurer fails to meet applicable code commitments. ASIC still has to assess the code, and a transition period is expected before the new framework starts applying, so policyholders should avoid assuming the proposed protections already govern their current policy.

For households and small businesses, the claims handling changes are especially important. The draft includes automatic acceptance of home and motor claims where no decision has been made after 12 months because of circumstances within the insurer's control. It also points to higher standards for trauma-informed handling, primary points of contact, cash settlements and expert reports. These are areas that often shape the practical experience of a claims process, not just the final payout decision.

The code also places more emphasis on customers experiencing vulnerability or financial hardship. A broader circumstances-based approach to vulnerability, alongside an Extra Care framework, is intended to recognise that difficult circumstances can arise suddenly and may affect communication, document gathering and decision-making. Family violence protections are also expected to be expanded to include financial abuse and coercion, with some protections becoming contractually enforceable.

There are limits. The General Insurance Code does not cover every type of insurance or every claim scenario. Statutory schemes, life insurance, health insurance, workers compensation and some liability or indemnity products may sit outside its scope. Small businesses reviewing business insurance should therefore check whether the relevant policy type is covered by the code and how the insurer describes its obligations in the policy wording and disclosure material.

The bigger message is that claims service is becoming a sharper measure of policy value. Premiums, excesses and exclusions remain important, but the way an insurer communicates, manages expert evidence, handles delays and supports people under pressure can be just as consequential when a loss occurs. If ASIC approves the code, the next test will be implementation: whether stronger written standards translate into faster, clearer and fairer outcomes in real claims.