Ask an Expert: What does the annual data suggest about the current level of compliance with the Life Insurance Code of Practice?

Based on our latest annual data and compliance report, published in March 2025, I would say that while there are some signs of improvement, overall compliance with the Life Insurance Code of Practice remains inconsistent. Several areas require significant attention.

For the period of July 2023 to June 2024, insurers reported nearly 14,700 breaches, which is a 19% increase compared to the previous year.

Of concern, these breaches impacted over 210,000 consumers, a 98% increase in consumer impact.

While this increase partly reflects improved breach identification due to enhanced systems among insurers, it also indicates persistent and, in some cases, worsening non-compliance.

When we look at the causes of breaches, 44% were due to human error (around 6,500 breaches), and 22% were from staff failing to follow processes (approximately 3,200 breaches).

This suggests that while breaches are often reported as isolated, there may be underlying systemic causes in areas of training, processes and supervision.

One major concern is compliance with obligations to support vulnerable consumers and people experiencing financial hardship. Breaches in this area have increased over the past three years.

Three insurers accounted for 91% of these breaches in 2023-24. 

An example of one of these breaches involved an insurer failing to notify 275 customers in financial hardship that their flexible premium support was ending.

This was due to a manual process failure.

Communication-related obligations were the top four most breached for the year, with almost 6,700 breaches.

Just three insurers were responsible for over 80% of these breaches. Common issues included failures or delays in providing updates to claimants and applicants.

There was a positive result in reported complaints with a 20% decrease, down to just over 60,000 complaints. This indicates that some improvements in customer experience initiatives are having an effect.

The leading causes of complaints were service-related issues (nearly 21,800), policy cancellations and changes (over 10,000), and sales practices or advertising (almost 4,800).

We expect insurers to look for improvements in these areas.

On claims handling, we saw some improvement in timeliness. For total and permanent disability (TPD) claims, 80% were determined within six months, up from 76% the previous year.

For income protection claims, 84% were determined within two months, up from 83%. However, death claims determined beyond 12 months increased by 24%, potentially causing significant financial hardship and stress for bereaved families.

Finally, insurers reported 32 significant breaches, impacting over 182,000 consumers.

This was an increase on the 20 significant breaches reported in the previous year. Many of these related to failures with annual notices, which continue to be a systemic compliance problem despite extensive guidance and past inquiries.

Overall, while there are some areas of improvement, the data shows that compliance with the Code continues to be a challenge for many insurers.

Stronger root cause analysis, system improvements, and cultural shifts are needed to meet the Code’s standards and protect customers effectively.

Attributable to Jared Orth, Senior Manager Code Compliance (Insurance) On behalf of the Life Code Compliance Committee.

  Have a question? Ask an Expert here.