New insurance code is not a blanket fix for consultant cover

The headline change is contractual enforceability. Under the proposed wording, many Code obligations would form part of covered insurance contracts, giving eligible policyholders a clearer legal pathway if an insurer fails to meet certain standards. The draft also includes provisions dealing with claims timeframes, vulnerability, financial hardship, family violence protections, investigations, complaints and standards for insurer representatives.

That matters because consultants often rely on insurance at moments when timing and communication are critical. A delayed claim decision, unclear request for documents or poor communication between insurer, assessor and customer can create real pressure for a small advisory business. Stronger service standards may help reduce uncertainty, particularly where a claim affects business equipment, premises, motor cover or other general insurance arrangements.

The limitation is just as important. The proposed Code draws lines around the products it covers. In the draft, some small business wholesale insurance categories are included for particular sections, but legal liability, public liability, products liability, professional indemnity, management liability, directors' and officers' insurance and cyber are expressly excluded from the listed wholesale cover categories. Many consultants therefore should not assume that the revised Code will directly change how their most important liability policies operate.

This distinction is especially relevant for management, IT, finance, HR and risk consultants whose core exposure is often advice-related loss rather than physical damage. A client alleging negligent advice, a missed contractual obligation or a data-handling error is likely to raise questions about policy wording, notification timing, exclusions, retroactive dates and defence costs rather than general service commitments alone.

Practical steps for consultants include:

• checking whether each policy is covered by the current or proposed Code once approved;
• reviewing claims notification clauses, especially for claims-made covers;
• keeping engagement records, advice notes and client instructions in an accessible format;
• confirming whether subcontractors and nominees are properly documented; and
• asking insurers or brokers to explain how complaints and claims timeframes apply to each policy.

ASIC approval and transition timing will determine when the revised Code takes practical effect. In the meantime, the development is a useful reminder that insurance protection depends not only on the existence of a policy, but on the exact product, wording, claims process and evidence available when a dispute arises.