12 October 2016

Life Insurance Industry Code

I'm somewhat saddened by the surveillance provisions in the new Life Insurance Industry Code of practice (strategically released a day before a major report highlighting bad practice on the part of leading insurers) and by the uncritical acceptance by the mass media of the Financial Services Council's claims.

The Code indicates that one "Key Code Promise" is
We will restrict the use of investigators and surveillance, to ensure your legitimate right to privacy.
The Code more problematically states
8.12 Where we require surveillance to be carried out:
a) alternative methods of verifying information will be sought prior to arranging surveillance; 
b) surveillance will only be arranged where we reasonably believe prior to carrying out the surveillance that your claim appears to be inconsistent with information available to us, and our reasons for this will be documented; 
c) requests for surveillance must be internally reviewed and approved by a senior claims manager; 
d) surveillance will not be conducted in any court or other judicial facility, in any medical or health facility, in any bathroom, change room, lactation room or inside your house; 
e) our investigator will not intentionally lm people in the company of the subject of the enquiry, and where this cannot be avoided, any footage of people in the company of the subject of the enquiry will be pixelated or blurred before being provided by us to any external party such as a court or external dispute resolution body; 
f) we will discontinue surveillance where there is evidence from an independent medical examiner that it is negatively impacting your recovery; and 
g) surveillance investigators will not communicate with neighbours or work colleagues in ways which might directly or indirectly reveal that surveillance is being, will be or has been conducted.
We might well be concerned that the industry is engaged in surveillance "in any court or other judicial facility, in any medical or health facility, in any bathroom, change room, lactation room or inside your house", particularly surveillance that is covert.

Such surveillance will typically be a breach of statute or common law. A promise not to do something that is illegal is unimpressive.

Under "Standards For Investigators" the Code states
10.9 We may engage an investigator to assist us with your claim. If we engage an investigator, in addition to the above obligations, we will require that:
a) surveillance can only be carried out by a licensed private investigator and they must comply with any relevant State and Territory legislation; 
b) the investigator does not use illegal means to carry out the investigation, or induce someone to perform a task or activity that they would not have performed without the involvement of the investigator; 
c) the investigator only collects information relevant to its investigation; 
d) the investigator does not make any threat or promise or offer any inducement to any person when conducting an investigation on our behalf; 
e) the investigator acts in accordance with the standards relating to interviews and surveillance in sections 8.11 and 8.12; and 
f) records of all investigation activities are kept in accordance with the requirements of the Privacy Act 1988.
Requiring that the industry's agents not break the law is not a major achievement and is something reasonably expected of insurers.