Quality and consistency through collaboration


The new General Insurance Code of Practice took effect on 20 January 2020 and required insurers to adopt it within 12 months.

Insurers already coping with the results of the recent bushfires now have the added pressure of responding to the devastation wrought by COVID-19. Many insurers have already moved to adopt, and have even far exceeded, the provisions of the new Code relating to financial hardship.

Financial hardship

Under the new Code, customers having difficulty meeting their financial obligations are suffering financial hardship. Persons who may also be identified as suffering financial hardship include third party beneficiaries or a third party that owes money to an insurer. Monies owing could be in relation to unpaid excess or a recovery from a third party.

Under the new Code, insurers are required to:

  • have internal policies and training to help identify persons suffering financial hardship
  • provide a form to apply for financial hardship support if the insurer is informed a customer is suffering financial hardship or the insurer identifies that the person is suffering financial hardship
  • assess the request for support while considering all reasonable evidence including illness, disability, Centrelink status and unemployment
  • place any recovery action on hold while considering the application or if the customer is identified as experiencing financial hardship, and
  • train employees and agents involved in debt collection in the financial hardship requirements of the Code.

If a person is entitled to financial hardship support, then the insurer may:

  • delay the date on which payment may be made
  • agree to an instalment arrangement
  • agree to accepting a reduced lump sum
  • delay one or more instalments for an agreed period
  • deduct excess from the claim amount paid, and
  • release, discharge or waive a debt.       

Customers also have the right to ask their insurer to fast-track a claim if they have an urgent financial need.

Many insurers have acted immediately to respond to the financial devastation caused by the COVID-19 pandemic. Measures adopted include placing moratoriums on instalment arrangements, immediately accepting a claim of financial hardship if informed that the person has lost their employment due to COVID-19 without needing supporting evidence, waiving debts (where appropriate), deferring premium payments for up to six months for small businesses experiencing financial hardship, and employing additional staff to cope with the surge of enquiries and requests.

Given the new Code aims to commit insurers to high standards of service, promote better relations between insurers and their customers and, most importantly, maintain and promote trust and confidence in the general insurance industry, the immediate and compassionate response of many insurers to the financial hardships being suffered in the Australian community shows insurers are already working to achieve those outcomes while helping to alleviate some of the widespread financial pain being experienced on an unprecedented level.

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