The General Insurance Code of Practice and why I think it is like a slap in the face with a wet fish

From time to time I get asked what I think about the GICOP…?

• What do you think about the proposed changes?

• Will they lead to change in the industry?

• That’s a breach of the GICOP isn’t it?

Maybe, but here’s the real problem:

The Code, GICOP or piece of paper, whatever you want to call it comes with little real power as it is not a legally binding document granting rights to the other party (insured) which can be enforced. For example, it doesn’t grant an insured a right to have the provisions enforced in Court!

It masquerades as an enforceable document, by having breaches reported to the committee. But how does that grant rights to the consumer, policyholder? It doesn’t!

We all know that insurers and some more than others have repeatedly breached timelines…so really it’s a set of aspirations…because there is no cause of action…

You see, you need a ‘cause of action’ to sue someone so without any right to enforce a provision it’s like….

You guessed it!!!!

A slap in the face with a wet fish

And I am talking about a slap in the face to an industry drawing in some $6 billion in profits! Probably more. Probably less for domestic insurers dealing direct but basically a HUGE industry.

When brokers are involved in claims, the situation is totally different in my experience, the insured has a professional on their side, batting for them, but when insurance is transacted in the direct market, those protections don’t exist and we see substantially more problems. The biggest one I see is so called expert reports from non-independent parties used to support a denial.

The only real way to make the GICOP valuable is to make the provisions within it enforceable, in a court of law, and the legal costs of the claimant enforcing those rights being awarded against the breaching party - the insurer!

I mean, why not, if you really want enforcement with its provisions make real, legitimate financial repercussions of non-compliance.

Now that would change conduct!

OR

Maybe we need more incentives for brokers to participate in direct business…after all, brokers are on the frontline and can make a material difference in advocacy for insureds. I know this because I did this for years in broking businesses.

What do you think can be done to assist in advocacy for insureds in the direct market?

If brokers make a material difference which is what I see, how can we encourage more intermediated business…?

This article is a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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• insurance law