Draft General Insurance Code of Practice (GICOP) - In Consultation

2 hours ago

4 min read

Australia’s general insurance sector continues to face a rapidly evolving regulatory environment, driven by heightened expectations around customer outcomes, accountability, and conduct. Against this backdrop, the draft General Insurance Code of Practice (GICOP) represents a significant shift towards a more prescriptive and legally enforceable framework, with far-reaching implications for claims handling, customer protections, governance, and third-party oversight across the industry.

The Insurance Council of Australia (ICA) has released a redrafted General Insurance Code of Practice for public consultation, representing a material uplift in regulatory expectations. The draft shifts the Code from a largely principles‑based framework to a more prescriptive and legally enforceable regime, with key impacts including:

Code obligations becoming contractually enforceable
A significant uplift in customer protection requirements
Expanded accountability for third‑party providers
Increased operational complexity and compliance burden.

Overall, the draft GICOP represents a fundamental shift in the industry’s approach to legal enforceability, customer outcomes, and operational accountability, and will significantly increase legal, conduct, and operational risk exposure, particularly across claims and customer-facing activities.

Early and structured mobilisation will be critical to manage legal, financial, and reputational risks and ensure readiness for implementation.

Nature of the change

The draft Code reflects:

Stronger alignment to ASIC regulatory settings (RG271, DDO, conduct focus).
Response to AFCA complaints trends (claims, cash settlements, investigations).
Increased expectation of customer-centric and defensible decision-making.

The Code should be viewed as a quasi-regulatory instrument, not just industry guidance.

Key changes and implications

Topic	Changes	Implication
Code becomes contractually enforceable	- Core Code provisions will form part of the insurance contract (section 1-9) - Customers can take legal action for breaches	- Elevates Code compliance to a direct legal risk - Increases exposure to litigation and AFCA disputes Extract from the ICA code submission webpage on what contractually enforceable means- This means that the redrafted Code (or parts of it) will be incorporated into insurance contracts by Code subscribers. Since the Code would be included in insurer contracts, if a breach of contract occurs, this gives you an option to challenge the breach in court.* Other ways Code will be enforced include ongoing oversight by an independent code administrator, and through AFCA. *customer
Expanded Definitions & Scope (Structural Change)	- Significant expansion of defined terms, including: · Claims Fulfilment Providers · Insurance Claims Managers · Nominee (customer representatives) · Vulnerability / Extra Care · Wholesale Insurance defined	- Extends Code obligations across the entire value chain - Reduces interpretation flexibility → increases enforcement risk - Introduces new compliance boundaries and obligations
Significant uplift in customer protection	- New obligations relating to: · Vulnerability and “Extra Care” · Financial hardship · Family and domestic violence	- Transition to a proactive duty of care model - Increased risk of conduct breaches and reputational damage
Claims handling – tighter controls and new risks	- More prescriptive requirements for claims timelines, information requests, decision transparency. - New rule- claims exceeding 12 months may be automatically accepted (home/motor)	- Heightened operational pressure on claims teams - Potential direct financial exposure from delayed claims
Cash settlement regime (new)	- Mandatory disclosures on valuation methodology, risks, scope of works	- Customers can reverse decision (within 20 business days) and request review (within 12 months) - Greater risk of re-opened claims and disputes
Nominee regime (new)	- Formal recognition of customer-appointed representatives - Insurers must follow nominee instructions and safeguard customer interests	- Introduces complexity in authority management and communications - Risk of disputes where interests diverge
Sales, pricing and renewal transparency	- Mandatory 14-day renewal notice, premium comparisons, clearer disclosure of discounts - Explicit ban on pressure selling	- Increased scrutiny of pricing practices and customer communications (Insurance Contracts Act- already enforces the renewal notice timeframe)
Financial hardship expansion	- Broader eligibility (including third parties and debtors) - Requirement to pause debt recovery and provide flexible repayment options - Faster decision requirements- 10 business days	- Greater interaction between claims, collections, and hardship processes - Increased conduct risk if inconsistently applied
Investigations strengthened	- More prescriptive controls over scope and conducting an interview. - New safeguards for vulnerable customers	- Reduced flexibility in investigations - Increased compliance overhead
Expanded third‑party accountability	- Explicit coverage of repairers, builders, outsourced claims providers Stronger requirements for monitoring, training and contractual compliance	- End-to-end accountability for supply chain performance
Governance and enforcement	- Increased sanctions up to $200,000 (indexed)- previous was $100,000. - Formalised reporting and oversight expectations	- Heightened regulatory and reputational risk

Proposed next steps - as an outcome of Code finalisation

Gap assessment (Q3-Q4 2026 - sooner rather than later) - detailed assessment against draft Code and identification of control gaps and process gaps.

Implementation roadmap - prioritisation of claims processes, vulnerability and hardship frameworks and third-party controls.

Governance uplift - enhance breach detection and reporting and Board reporting metrics.

Systems and data - Strengthen capability to capture vulnerability indicators and support audit trails.

Industry engagement - participate in ICA consultation where possible.

Boards - Boards are to support early mobilisation and prioritisation of implementation and endorse investment focus on claims capability, customer and vulnerable frameworks and third-party oversight.

How we can help

Understanding the implications of the draft GICOP is only the first step. As insurers prepare for a more prescriptive and legally enforceable Code, organisations should assess the adequacy of their governance, processes, systems, and customer frameworks to identify areas requiring uplift.

Hall Advisory helps boards and executives understand the impact of regulatory change, identify compliance gaps, and deliver practical implementation outcomes. Our support includes:

Draft GICOP readiness and gap assessments
Claims process and operating model reviews
Vulnerability, hardship and customer framework enhancements
Governance, compliance and breach management uplift
Third-party oversight and accountability reviews
Implementation planning and program delivery support
Board and executive reporting framework design

By combining regulatory expertise with practical implementation experience, we help organisations navigate the proposed GICOP reforms with confidence and ensure readiness for a more demanding compliance and customer-focused environment.

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