Is it time that the industry considered an ethics committee?

The Federal Government felt the need to introduce the Insurance Contracts Act in 1984 due in part to the perceived lack of good faith in the general insurance industry.

Since that time a number of policies particularly in the home and contents space, but not just her,e have had what have been promoted as enhancements. Certainly the sub-limits have increased but most would argue that they have not kept pace with inflation.

What is more worrying is that with the introduction of Accidental Damage wordings, the exclusions are so broad the basic losses, that have been covered by fire policies as far back as the 1680’s are no longer covered, despite higher premiums being charged.

For example, many “Gold Class” policies have exclusions that exclude all losses arising from faulty workmanship, and or damage by vermin with no write back for resultant damage. When a home and contents policy no longer covers the peril of fire where the Insured did not deliberately set fire to their own property, then its value must be challenged.

Other subtle changes include the removal of the Joint Insured clause which protected an innocent insured.

Yet another example is the Claytons flood coverage that some policies purport to include.

The question that I keep asking myself is, are these changes occurring as a deliberate strategy by the underwriter or are they creeping in due to innocent mistakes which are then copied by the next policy drafter? I simply do not know the answer although when I speak to some senior personnel within some of the insurers they advise that they do not believe the consequences of the exclusion where understood and that it is a drafting error.

I have written to a number of underwriters on such issues of late and in most cases I have been advised that it was an error and they will address it in the next reprint.

With the number of such issues increasing, I think it is time for the industry to consider an ethics committee where such issues could be taken for consideration in an effort to protect the insuring public and to reduce the likelihood of further damage to brand insurance.