According to Safe Work Australia, a code of practice provides detailed information on how you can achieve the standards required under relevant health and safety laws. Codes of practice set standards of good industry practice in areas relating to:
- Service provision
- Standards of professional conduct
- Practice standards
- Ethical behaviour
These codes promote higher standards of business and personal ethics. Many companies subscribe to codes applicable to their practises for reasons such as:
- Strengthening relationships with their customers
- Improving complaints handling
- Reducing the number of disputes through improved service delivery
Entities such as the Insurance Council of Australia (ICA) in Australia, the Financial Conduct Authority in the U.K., and the National Association of Insurance Commissioners in the United States set and maintain insurance standards across the globe.
The general insurance industry in Australia, an industry covering roughly $40bn in premiums, is going through large-scale regulatory and compliance changes with the introduction of the new General Insurance Code of Practice 2021. However the health insurance industry, covering roughly $26 billion in premiums is currently not subject to the same level of regulation.
While we have written extensively on the impacts of the GICOP changes to general insurance investigations, it is important to understand how these compare to other industry codes, and how these codes might be updated in the near future to replicate some of the changes from GICOP. This blog will compare the general insurance code and health insurance code in order to understand the overlaps as well as the differences.
This blog will cover:
- What is the General Insurance Code of Practice
- What is the Private Health Insurance Code of Conduct
- Comparison of the General Insurance Code and Health Insurance Code
What is the General Insurance Code of Practice
The General Insurance Code of Practice is a voluntary Code of Practice maintained by the Insurance Council of Australia under which ICA members agree to follow certain principles and standards in providing general insurance services.
The Insurance Council of Australia (ICA) has released a new General Insurance Code of Practice, and all insurers were required to implement the changes by July 1, 2021. The industry is going through one of the largest regulatory and compliance changes in history. New General Insurance Code of Practice: What changes for investigation teams? can help you understand how it applies to your practice.
Purpose of the General Insurance Code of Practice
According to the ICA, the Code is intended to be a positive influence across all aspects of the general insurance industry including product disclosure, claims handling and investigations, relationships with people who are experiencing vulnerability, and reporting obligations. The code sets out standards such as openness, fairness and honesty when providing to customers. It also sets out timeframes for insurers to respond to claims, complaints and requests for information from customers.
A full copy of the Code is available at Insurance Council of Australia.
What is the Private Health Insurance Code of Conduct
The Private Health Insurance Code of Conduct is a self-regulatory and voluntary code to promote informed relationships between Private Health Insurers, consumers, agents, brokers and corporate brokers.
Purpose of the Private Health Insurance Code of Conduct
The Code’s objective is to maintain and enhance regulatory compliance and service standards across the private health insurance industry. According to Private Healthcare Australia, the code is designed to help you by providing clear information and transparency in your relationships with health funds.
Private Health Funds who are signatories to the Code agree to:
- work towards improving the standards of practice and service in the private health insurance industry;
- provide information to consumers in plain language;
- promote better informed decisions about their private health insurance products and services by:
- ensuring that policy documentation is full and complete;
- providing clear explanations of the contents of their policy documentation when asked by a consumer; and
- ensuring that persons providing information on health insurance are appropriately trained
- ensure information between consumers and the fund is protected in accordance with privacy principle
- provide information to consumers on their rights and obligations under their relationship with the consumer, including information on this Code of Conduct; an
- provide consumers with easy access to the fund’s internal dispute resolution procedures, which will be undertaken in a fair and reasonable manner and to advise them of their rights to take an issue to an external body such as PHIO
A full copy of the Code is available at Private Healthcare Australia.
Comparison of the General Insurance Code and Health Insurance Code
Although both the General Insurance Code and Health Insurance Code aims to set higher standards of service and transparency in your relations with customers, there are a few notable differences.
Who Monitors the Code
The General Insurance Code Governance Committee (CGC) independently monitors the Code to ensure companies are meeting their obligations, and achieving service standards consumers can trust.
The Code of Conduct Compliance Committee established by Private Healthcare Australia ensures the Health Insurance Code is being adhered to.
What the Code Covers
The General Insurance Code of Practice covers many aspects of a customer’s relationship with their insurer, from buying insurance to making a claim, to providing assistance to those experiencing financial difficulty including uninsured third parties. General insurance products covered by the Code include:
- Accident and sickness
- Consumer credit
- Personal and domestic property
- Residential strata
- Contractors all risks
- Primary industries
- Industrial special risks
- Other commercial products
However, the General Insurance Code of Practice does not cover life and health insurance products issued by life insurers or registered health insurers. In addition, the General Insurance Code of Practice is not applicable for things such as:
- Workers compensation
- Marine insurance
- Medical indemnity insurance
- Compulsory third-party insurance
Meanwhile, the Private Health Insurance Code of Practice covers only Private Health Insurance, as well as some provisions covering intermediaries by extension – though they also have their own code, the Private Health Insurance Intermediaries Code of Conduct.
Requirements for Investigations under the General Insurance Code of Practice
One of the key differences between the codes are the requirements around investigations. The General Insurance Code of Practice outlines many requirements pertaining to investigations.
The COP has a quality assurance program to regularly monitor and review investigations. This may include reviews of:
- recordings, statements, affidavits or transcripts of interviews
- Investigators’ records of investigation activities
- Complaints about investigations, including disputes referred to the Australian Financial Complaints Authority
The quality assurance program will include reviews of non-genuine claims indicators to make sure they remain relevant, appropriate and do not discriminate. These are reviewed at least once a year.
If an investigation has gone on for 4 months, the claim will be independently reviewed by an Employee with appropriate authority, knowledge or experience, according to COP. Complainants will be informed when this happens.
Some additional constraints are summarised below
- Investigators are required to remain objective, honest, efficient, transparent and fair at all times.
- A single interview sitting may only last for up to 90 minutes.
- If the total interview time required is over 4 hours, the Investigator must obtain written consent from the ICA.
- The Investigator must record all offers of breaks, and the interviewee’s responses.
- If another interview time is needed, it will not be organised without at least a 24 hour break, unless otherwise agreed.
- If during the interview it becomes apparent that an interpreter is needed (even though one had not previously been requested or arranged), then the Investigator or Employee will: a. pause the interview; and b. restart it at a later time, or date, once an independent interpreter has been arranged.
- If during the interview the employee requires additional support (example: lawyer, consumer representative or a friend), the Investigator will: a. pause the interview; b. advise you of the support person’s role in the interview process and c. restart the interview at a later time, or date, once the support person has been arranged.
- There will be a 5 minute break in the interview every 30 minutes. However, if an employee claims to be experiencing vulnerability, then there will be a 5 minute break every 30 minutes.
- Employees can request additional breaks and stop the interview early and reschedule if needed.
Requirements for Investigations under the Private Health Insurance Code of Practice
There are currently no requirements around investigations under the Private Health Insurance Code of Practice. The recent changes to the GICOP requirements may add pressure on the private health insurance industry to adopt similar measures. However, these changes are unlikely to affect investigations in this industry for several reasons. Firstly, fraud in this industry is more likely to be related to providers than claimants. Secondly, and relatedly, the majority of ombudsman complaints are about other aspects of policy or service – though benefit payment delays were a significant proportion of complaints, and this could be affected by a poorly managed investigation. If similar measured are adopted by Private Healthcare Australia, they are more likely to apply to policy conditions, communication, sales, and service.
Breaches to the Code
The Code Governance Committee prepares an annual compliance report. Significant Breaches to the code will be reported to the Code Governance Committee within 10 Business Days. The Code Governance Committee may impose additional sanctions for Significant Breaches of the Code, including requiring them to do any one or more of the following:
- compensate an individual for any direct financial loss, or damage, we caused them arising from a Significant Breach;
- publish the fact that we have committed a Significant Breach of the Code;
- pay a community benefit payment for a Significant Breach up to a maximum of $100,000. The size of the community benefit payment must be in proportion to our gross written premium and number of customers.
The Code of Conduct Compliance Committee established by Private Healthcare Australia also publishes an annual report on the operation of the Code, including a summary of compliance. This report will be published on the websites of Private Healthcare Australia and the Members Health Fund Alliance.
If a health fund fails to comply with a sanction, the Committee may do one or more of the following:
- Take action to enforce compliance with the code or sanction.
- Disqualify and immediately ban the health fund from using the Code of Conduct tick logo.
- Name the health fund in the annual report as having not complied with the Code and/or having not complied with a sanction.
- Report the breach on the PHA and Members Health Fund Alliance website.
- Request that the Health fund report the breach on their own website.
- Request that any issued sanctions be published on the non-compliant Health Fund’s website.
- In cases where the Committee considers the breach of the Code may constitute a breach of any regulatory or legislative obligation, report the health fund to the appropriate government agency.
- Request the health fund publish corrective advertising within one month of the request
How Polonious Can Help
In the ever-changing regulatory and compliance environment, organizations need to continue to stay up-to-date in their knowledge and conduct to avoid costly risks such as reputational and financial damage.
Polonious is constantly adding new features with further configurability and can also deploy new code as required. Our experts can utilize our legal and technical expertise to help you adhere to industry codes, company policies and relevant laws, while enabling you to improve productivity and workflow.
A comparison of the General Insurance Code and Health Insurance Code will help you understand the large-scale changes to the General Insurance Code as well as the health insurance code and how it applies to your practice.
It is important for companies to subscribe to codes applicable to their practice in order to avoid any reputational harm.
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