The Life Code Review's Final Report: 85 recommendations, a new deal on mental health, and tighter claims handling

This is our detailed read of the final package: what it says, what changed between the Interim Report and the final one, where the industry's pushback succeeded and where the Reviewer held the line, and what it is likely to mean if you hold, or are claiming on, TPD or income protection cover.

Throughout the review we examined the evidence base behind it, the APRA and AFCA data, the ASIC enforcement record and the Code compliance committee's findings. This article looks at how the final recommendations landed against that evidence.

How we got here

The review, led by Independent Reviewer Peter Kell, ran from October 2025. A Consultation Paper drew 14 submissions; an Interim Report published in April 2026 drew another 11; and the Reviewer held more than 50 meetings with insurers, consumer groups, mental health advocates, medical experts, lawyers, and the regulators — APRA, ASIC, AFCA, the Australian Human Rights Commission and the Life Code Compliance Committee (LCCC), the body that monitors insurers' compliance with the Code.

Two things shaped the final months of the review. First, the industry body — the Council of Australian Life Insurers (CALI) — lodged a supplementary submission in March 2026 arguing that the Code's existing restriction on mental health exclusions is "not sustainable" given the rise in mental health claims. Second, the Reviewer took the unusual step of obtaining advice from Counsel on when insurers can lawfully limit mental health cover under the Disability Discrimination Act 1992 (DDA). Both ended up defining the report's most consequential section.

The mental health settlement, what was traded, and for what

Mental health was always going to be the flashpoint of this review, and the Final Report confirms it was "the most significant area of focus." The numbers explain why: mental health is now the largest driver of permanent-disability claims in Australia, and insurers have been openly warning that the products are under strain. Even the Reviewer accepts the sustainability challenge is real. The question was what the Code should permit in response.

What the old Code said

Clause 2.1(b) of the current Code commits insurers, when designing new products, not to build a blanket exclusion for mental health into standard policies, a commitment most stakeholders understood to go beyond the minimum the DDA requires. CALI asked the review to remove that restriction so insurers can design products with mental health limitations to the extent the DDA allows.

What the Final Report recommends

The Reviewer has essentially accepted the industry's core position, with guardrails. The final package:

• Replaces clause 2.1(b) with an explicit commitment to comply with the DDA and other anti-discrimination laws (sex, age, and state and territory legislation included).
• Prohibits only complete exclusions: policies that offer no mental health cover at all, including designs where a customer can opt out of mental health cover entirely. The Reviewer is blunt about why: for the industry to "walk away" from mental health cover in disability products would harm consumers and undermine its social licence. Specific-condition products such as critical illness cover are carved out.
• Permits limitations short of a complete exclusion — provided they comply with the DDA, are supported by documented actuarial or statistical data, and are reviewed at least every three years to confirm they remain necessary and proportionate.
• Requires a consumer guide: a plain-English "Consumer Guide to Life Insurance and Mental Health," to be prominently placed on insurer websites and developed with input from consumer advocates and mental health experts.
• Defers the hard details to an industry process — CALI is to lead further work with stakeholders on principles for "sustainable product design," including the idea that policies should still offer meaningful mental health cover and that any limitation should be defined as narrowly as practicable. The LCCC is asked to review how it all works in practice before the next Code review.

The legal advice the Reviewer obtained (from Stephen Walsh of Counsel) matters here. It concludes that insurers can lawfully exclude or limit cover for mental health conditions under the DDA's insurance exemption, but only where the decision is backed by relevant actuarial or statistical data and is reasonable in all the circumstances, and that a total exclusion of all mental health conditions is harder to justify than a targeted one. In other words, the legal floor was never as high as many assumed; the argument was always about how far above that floor the Code should sit.

The quiet win: underwriting transparency

Less noticed, but significant for anyone applying for cover with a mental health history: when an insurer declines cover or offers non-standard terms, the Final Report says the reasons must be given in writing, the information provided must be the same whether you are declined or offered alternative terms, and, on request, the insurer must provide a plain-English summary of the actuarial and statistical data it relied on, in enough detail to understand how it connects to the decision. Insurers would also have to explain, as part of the application, what mental health information needs to be disclosed and what does not. These apply to all underwriting decisions, not just mental health ones. For people who have long been told "the decision was based on our underwriting guidelines" and nothing more, this is a meaningful shift.

Claims handling: what survived industry pushback, and what didn't

Our analysis during the review argued that the real gaps in the system are in claims communication and delay, not in headline acceptance rates. The Final Report's claims-handling section reads like a negotiation over exactly that ground. It is worth being precise about what made it through.

Dropped or softened after feedback

• The 5-day information window is gone. The Interim Report proposed cutting the time insurers have to deliver key information at the start of a claim from 10 business days to 5. Industry said it was unworkable; the Reviewer agreed it was unlikely to improve outcomes, and the 10-day standard stays.
• The treating-doctor rule is gone. A proposed obligation to consult a claimant's treating doctor before deciding whether they meet a medical definition was removed, after CALI showed existing claims processes already seek that information.
• Family violence wording softened from doing "everything possible" to "everything reasonably possible" to protect a person's safety, a small but telling change.

Kept, despite industry objections

• Reopened claims get half-time limits. CALI argued reopened claims should have no fixed timeframe. The Reviewer disagreed — insurers should not be able to "restart the clock" — and set limits of one month for income-related claims and three months for lump-sum claims such as TPD: half the standard timeframes.
• Progress updates must have substance. Updates will need to cover what has happened since the last update, what the insurer is waiting on, and — over industry objections — a reasonable estimate of when a third-party delay will resolve. "Still in progress" will no longer do.
• A real person on every claim. Every claim must have a named primary contact who is an actual human being able to help with the claim.
• "Circumstances Beyond Our Control" gets a structure, and a spotlight. The catch-all provision insurers use to extend claims beyond the standard two- and six-month limits will be restructured with clearer components, including fixed timeframes where insurers rely on suspected non-disclosure or fraud investigations. The LCCC is to publish data on how often, and on what grounds, insurers invoke it. Sunlight, in our experience, is exactly what this provision needs.
• Surveillance stays capped. CALI asked for the ability to run multiple four-month surveillance periods per claim. The Reviewer refused — that would amount to open-ended surveillance — and held the line at one defined period of no more than four months, with a narrow, documented exception if material new information emerges.
• Decisions inside the clock. Insurers must tell claimants their decision within 15 business days and within the overall claims-handling timeframe — closing off the practice of tacking notification time onto the end of an already long process.

Taken together, the pattern is consistent: the Reviewer conceded the process changes that mostly created administrative load, and kept every change aimed at the mechanisms that let claims drift — reopened claims, vague updates, CBOC and surveillance. For claimants, that is the right trade.

Enforcement: teeth now, contract later

The perennial criticism of industry codes is that they are promises without consequences. The Final Report's answer comes in two parts — one immediate, one deferred.

Now: the LCCC's sanction powers get a genuine upgrade. Restrictions that stopped it applying Community Benefit Payment sanctions to breaches reported to ASIC are to be removed, prescriptive thresholds on those sanctions go, and the LCCC will be able to name insurers involved in its inquiries and reports. How long a breach lasted — and how long it went undetected — becomes a factor in whether it counts as a "Significant Breach." For a body that has historically reported breach data anonymously, naming names is the power most likely to change behaviour.

Later: on the bigger question — making the Code contractually enforceable, so its commitments become terms a customer can actually hold an insurer to — the Reviewer supports it in principle, recommends the eventual removal of the clause (8.10) that currently keeps most of the Code out of contracts, but accepts the timing is complicated by the mental health work and the Government's proposed mandatory service standards for superannuation. The process is to be taken up by CALI after the mental health work, and built into the terms of reference for the next review. Notably, the Reviewer also recommends that CALI should not seek to have any provisions designated as ASIC enforceable code provisions, the statutory alternative. So: contractual enforceability, endorsed but parked. Consumer advocates have seen this movie before, and the Reviewer's own framing concedes it will take years. In the meantime, ASIC approval of the Code, which the report says should not wait for the mental health issues to be resolved, and five-yearly reviews are the accountability mechanisms on offer.

The rest of the package, briefly

• Vulnerability: the Code is to adopt the definition and key principles of the Australian standard on consumer vulnerability (AS 22458), recognise that anyone can become vulnerable at any time, and add bereavement, cognitive impairment and trauma to the risk factors that should prompt an insurer to offer extra care.
• Financial hardship: insurers will need to watch for listed hardship risk factors — including, importantly, customers asked to repay an overpaid benefit — ask about support when they appear, contact customers about hardship options within five days, and give 20 business days' notice before support ends.
• Funeral insurance: perhaps the cleanest consumer win in the report. Funeral policies would need a "premium guarantee", the benefit paid is the higher of the sum insured or total premiums paid, with premiums refundable if a policy held for two years or more is cancelled, and funeral insurance could not be sold to anyone under 40, or to anyone who already has a funeral policy.
• Premiums: insurers must explain, early in the sales process, how premiums behave over time, including what happens when an upfront discount ends. The Reviewer declined to prohibit upfront discounting itself, treating pricing as a matter for regulators rather than the Code.
• Medical definitions: the Code's medical definitions move to a standalone guide maintained by an expert panel, reviewed at least every three years, with a new requirement to explain to a claimant which definition was applied and how the results compare.
• Genetic testing: the Code's moratorium is removed, not weakened, but superseded, because the ban on using genetic test results in life insurance underwriting is now in the Insurance Contracts Act. The report flags, without resolving, the position of people who received adverse underwriting outcomes before the ban.

What this means if you have a claim, or are about to make one

None of this changes your rights today. The recommendations now go to CALI and the industry, which must decide what to adopt and then redraft the Code, a process the report itself acknowledges will take time, with some parts (mental health guidance, super service standards) explicitly left open. The current Code, with its existing timeframes and commitments, keeps applying in the meantime.

But the direction is now settled, and three practical points follow:

• The current standards already give you leverage. Two months for an income protection decision, six months for a lump-sum decision, updates at least every 20 business days, and an explanation when a claim runs long. These apply now. If your claim is drifting past them without explanation, that is worth challenging, not accepting.
• If you hold cover today, your mental health cover is governed by your existing policy. The new design flexibility is about future standard-form products. What you hold now — and what definitions and exclusions apply to you — turns on your policy wording, which is exactly what is worth checking before assuming you do, or don't, have a claim. Our mental health claims page covers how these claims work under current policies.
• Watch the fine print on new policies. As redesigned products reach the market, the differences between policies on mental health cover will widen. The report's transparency measures — the consumer guide, the premium explanations, the written underwriting reasons — exist precisely because those differences will be hard for consumers to see unaided.

Not sure what cover you actually hold, or whether a stalled or declined claim is worth a second look? A free claim check is an obligation-free way to map the cover in your super — TPD, income protection, death and terminal illness — and the pathways that may fit your situation.

Start a free claim check →

How the Final Report lines up with the evidence

Throughout the review, we argued the evidence pointed to four weak points: claims communication, delay, the direct (non-advised) sales channel, and mental health. The Final Report speaks to each, with different degrees of conviction.

• Communication: substantively addressed. Minimum-content updates, a named human contact, written reasons and delay-resolution plans all made the final cut.
• Delay: substantively addressed. The CBOC restructure, published CBOC data, reopened-claim timeframes and decision-within-the-clock rules target the delay mechanisms directly — though the 5-day information window was given back.
• The direct channel: partially addressed. The funeral insurance package and the "unacceptable sales practices" definition tighten the worst corner of the direct market, but the structural weakness of non-advised sales remains a matter for regulators rather than the Code.
• Mental health: resolved as a framework rather than an answer. The prohibition-with-guardrails settlement is defensible on the evidence, but its consumer protections depend on work that has not yet been done. It is the part of this report most worth watching over the next two years.

For the background analysis — the interim proposals as they stood, and our earlier summary of what the review meant for claimants — see our June article, LICOP 3.0: Australia's life insurers face a higher claims bar.

This article provides general information only. It does not take into account your personal circumstances and is not financial, legal, medical or tax advice. Claim eligibility depends on the relevant policy wording, legislation, medical evidence, employment history and individual circumstances. The recommendations discussed are proposals to the industry and are not yet part of the Life Insurance Code of Practice.

Sources and further reading

• Independent Review of the Life Insurance Code of Practice — Final Report (30 June 2026) and Interim Report (April 2026), including published submissions and Counsel's advice. lifecodereview.org.au
• CALI, supplementary submission on mental health (24 March 2026), Life Code review website.
• Actuaries Institute, response to the Interim Report (12 May 2026), Life Code review website.
• Life Code Compliance Committee, submission on the Interim Report (May 2026), Life Code review website.
• APRA, Jane Magill, TPD Sustainability: a product made for one world tested in another (speech, All Actuaries Summit, 27 May 2026). apra.gov.au