The independent reviewer, Peter Kell, published his Interim Report on the Life Insurance Code of Practice (Code) on 10 April 2026. The report shares early findings and recommendations from the first phase of the Code review. While the report is not final, it suggests that Australian life insurers will need to raise their standards. This includes changes to product design, underwriting, claims, vulnerability support, hardship, complaints, governance and enforcement. Stakeholders can respond to the Interim Report by 8 May 2026. The final report is due to the Council of Australian Life Insurers (CALI) by 30 June 2026.
Mental health is the central policy issue
Mental health is the main focus of the Interim Report. This reflects the rise in mental health-related claims. It also addresses ongoing debate about affordability, sustainability and fair treatment.
The reviewer recommends:
- moving the industry’s mental health commitment into the main body of the Code, removing Appendix B;
- developing a standalone plain-English ‘Consumer Guide to Life Insurance and Mental Health’; and
- when an insurer declines cover or offers non-standard terms for mental health, the customer should receive: written reasons, a chance to correct information, and a plain-English summary of the actuarial or statistical data used to make the decision.
However, the report leaves open a bigger question for the future of the life insurance industry: Should insurers be allowed to apply blanket mental health exclusions in standard form policies without assessing each person individually? The report notes that although there are different views, the reviewer considers that the current version of the Code is appropriately understood as restricting blanket mental health exclusions. CALI argues this approach is not sustainable if mental health risk can only be managed through individual underwriting. The Disability Discrimination Act 1992 (Cth) allows some product design limitations, but the current Code position is stricter. The reviewer is seeking more feedback on this issue.
Vulnerability
The Interim Report proposes a broader approach to supporting vulnerable customers. The new definition would align with Australian Standard AS 22458:2025 on consumer vulnerability. It would move away from relying mainly on customers to identify themselves as vulnerable. Instead, the report recommends a ‘risk-factor approach’. This means recognising that anyone can become vulnerable at any time. The Code should identify a wider range of indicators, including personal characteristics, health and abilities, access and skills, life events and external conditions. The report also proposes trauma-informed policies and training. It suggests that insurers should record relevant personal information with consent. Insurers should also clearly explain what support is available.
Family and domestic violence
For family and domestic violence, the reviewer proposes that the Code should require insurers to put the safety of affected customers and their families first. Insurers should also comply with CALI’s Best Practice Guidance. This includes having public policies, privacy and confidentiality protections, and Safety by Design principles in new products.
Hardship
For financial hardship, the reviewer would reshape the Code around several key changes: earlier identification of hardship, a clearer statement of intent to help customers keep their cover or speed up claims, easy-to-access hardship information, flexible support tailored to each customer, contact within five days of hardship being identified, and 20 business days’ notice before support ends.
First Nations support
The report also calls for better support for First Nations customers. In particular, it recommends:
- easy-to-find website support targeted to Aboriginal and Torres Strait Islander peoples;
- an option for customers to identify as Aboriginal and/or Torres Strait Islander with consent to retain that information;
- broader cultural competency training for staff interacting directly with First Nations customers; and
- stronger operational understanding of issues such as gratuitous concurrence and language access.
Claims handling, superannuation claims and medical definitions
Claims handling is a major focus because it drives customer trust and complaints. The reviewer does not recommend changing the main Code decision periods (two months for income-related claims and six months for lump sum claims). However, the report proposes stricter surrounding obligations, including:
- reducing the initial claim information period from 10 business days to 5 business days;
- requiring written decisions within the existing overall claims timeframe;
- shortening the reassessment period for reopened claims; and
- prescribing more meaningful content for regular claim updates.
The report also recommends that:
- all claimants, not only income-related claimants, should have a human primary contact;
- insurers should explain why requested information is needed;
- long-delayed claims should trigger a written explanation of the delay together with a concrete path to resolution; and
- a clearer definition of ‘Circumstances Beyond our Control’, stricter expectations about follow-up with third parties, and more detailed reporting to the Life Code Compliance Committee (LCCC) on how this term is used.
For insurers writing group business through superannuation, this report is especially important. The Government plans to introduce mandatory service standards for large APRA-regulated superannuation funds, including for insurance claims handling. The reviewer recommends that Code provisions about superannuation claims should be reviewed as soon as these reforms are finalised.
The report also proposes changes to how medical definitions are handled. It suggests moving the existing Code definitions into a separate Medical Definitions Guide, supported by an expert panel. The current requirement for a review every three years would remain. The expert panel would also review the current definitions as soon as possible. Insurers would need to clearly explain which definition was used in a claims assessment and why.
Sales practices, premium communications and complaints
The Interim Report also addresses conduct concerns outside the claims context. It recommends updating the Code to reflect the new premium labels adopted for new retail policies from 1 January 2025. It also proposes an upfront obligation to explain: premium types, likely premium increases over time, the impact of discount cessation, and illustrative premium trajectories. The report also proposes stronger rules on unacceptable sales practices, clearer cancellation processes, and tighter protections for funeral insurance. This includes bans on selling funeral insurance to consumers under 50 or to customers who already hold funeral insurance.
On complaints, the reviewer considers the Code is broadly aligned with ASIC Regulatory Guide 271 Internal dispute resolution. However, the report recommends adding an express clause requiring subscribers’ internal dispute resolution processes to comply with RG 271. It also recommends clearer references to AFCA and stronger use of complaints as feedback for continuous improvement.
Governance and enforceability
Governance and enforceability are central to making the Code effective. The report recommends stronger LCCC sanction and reporting settings. This includes broader access to breach information, removing current restrictions on Community Benefit Payments, and allowing the LCCC to name insurers in LCCC inquiries and reports without attributing specific data to them.
The reviewer does not recommend making Code provisions enforceable by ASIC. However, the report recommends that the Code be incorporated into new customer contracts. The review is being conducted in a way that could support a future ASIC approval application.
Practical implications for insurers, sponsors and investors
For Australian life insurers, this Interim Report is more than a drafting exercise. It is a broad review of how insurers should operate. The report covers product governance, underwriting transparency, customer communications, claims operations, cultural capability, training and compliance oversight. Insurers with direct distribution, superannuation-linked group insurance, legacy products, or funeral insurance exposure will also be affected. Insurers that rely heavily on distributors and third-party service providers should expect closer scrutiny of sales journeys, cancellation processes, third-party claims dependencies, and staff capability in dealing with vulnerable and First Nations customers.
For fund managers and institutional investors with exposure to Australian life insurers, the report signals potential for higher compliance and remediation spending. It may also lead to changes in product design settings. There will be deeper focus on claims handling, complaints, legacy books, direct sales controls and governance. In transactions, investors are likely to want clearer visibility. Key areas include how an insurer manages mental health underwriting, vulnerability frameworks, group insurance interfaces, ‘Circumstances Beyond our Control’ usage and Code breach reporting.
What clients should be doing now
Clients should consider starting a gap analysis now rather than waiting for the final report. The Interim Report already sets out detailed proposed changes across the main operational and governance parts of the Code. The final recommendations are due by 30 June 2026. In particular, insurers should review their current mental health product terms, underwriting questionnaires, refusal letters, alternative-terms letters, and customer-facing disclosures. This will help assess how readily they could support the report’s transparency recommendations. It will also help them respond to any shift in how standard form mental health limitations are treated.
Claims, hardship and complaints teams should map their current end-to-end processes against the proposed requirements. This includes the 5 business-day timeframe, update content, primary contact, hardship notification and delay explanation requirements. Teams should also consider dependencies on trustees, group policy owners, medical providers and other third parties. Management should assess whether vulnerability, family violence, First Nations and training frameworks are mature enough. These frameworks need to support the more proactive and documented approach the report contemplates. Where the proposals would materially affect a company’s business model, relationships with superannuation funds, or mental health product settings, there is a clear case for participating in the consultation process before 8 May 2026.
