Final Life Code Review Signals Higher Standards for Life Insurers
Business owners should prepare for clearer rules on premiums, claims and mental health cover
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The independent review of Australia’s Life Insurance Code of Practice has moved from consultation to action, with reviewer Peter Kell releasing a final report that recommends 85 reforms.
For business owners, directors and partners who rely on life cover to protect revenue, debt obligations and succession plans, the review is more than an industry governance exercise.
It points to a future in which insurers may be expected to explain decisions more clearly, communicate premium risks earlier and handle claims with greater consistency.
This story extends earlier coverage of the interim review, which had already flagged stronger consumer protections. The final report goes further by setting out a broad reform agenda across mental health cover, underwriting, vulnerable customers, First Nations customers, claims handling, dispute resolution and enforceability. The Council of Australian Life Insurers will now consider the recommendations, with the industry expected to respond before any revised code is finalised.
A key area for business policyholders is mental health. The report recommends stronger standards to ensure customers with mental health conditions are treated fairly and transparently, while also recognising the sustainability pressures insurers face as mental health-related claims rise. It also recommends preventing standard policies from excluding all mental health conditions, including arrangements where customers could opt out of mental health cover altogether. For SMEs, this matters because mental health can affect owners, senior staff and key revenue generators just as materially as physical illness or injury.
The underwriting recommendations are also relevant to owners seeking business life insurance, key person insurance or buy-sell agreement cover. Where cover is declined or offered on non-standard terms, insurers would be expected to provide written reasons, explain how disclosed information affected the outcome and give applicants an opportunity to correct information. On request, applicants could also receive a plain English summary of the data or actuarial basis relied on. That could make difficult underwriting outcomes easier to understand and challenge where information is incomplete or misunderstood.
Claims handling is another major focus. The review recommends clearer claim contacts, better update requirements and tighter timeframes for reassessing reopened claims. In a business context, delays can quickly affect cash flow, loan servicing, equity transfers and continuity planning. If the final reforms are adopted, business policyholders may see more structured communication during stressful claim periods.
Premium transparency may prove just as important. The report recommends that insurers explain key premium information earlier in the sales process, including how premiums may increase over time, how temporary discounts work and the difference between premium structures. For business owners balancing affordability with adequate protection, this reinforces the importance of reviewing cover regularly and obtaining specialist advice before relying on any policy as part of a succession, debt protection or key person strategy.
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Waiting Period: The time period that must pass after filing a claim before the insurance coverage becomes effective or benefits are paid.
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