Life insurers in Australia are being urged to tighten protections against financial abuse linked to domestic violence. New guidelines from the Council of Australian Life Insurers (CALI) set out measures to prevent perpetrators from using life insurance policies to exert control over victims.
The initiative comes as financial abuse, a lesser-known but serious form of domestic violence, is increasingly recognised as a significant issue. According to the Australian Bureau of Statistics, up to 1.6 million women in the country have experienced financial abuse from a partner.
The recommendations aim to stop policies from being manipulated for coercion, intimidation, or even lethal intent.
Strengthening Industry Safeguards Against Financial Abuse
The guidance, released by CALI, outlines key measures for insurers to ensure their policies are not misused. One of the most critical recommendations involves enforcing informed consent before adding individuals to a policy, reducing the risk of policies being taken out on victims without their knowledge.
Another measure focuses on applying the forfeiture rule, a legal principle preventing individuals who commit homicide from benefiting financially from the victim’s death. CALI emphasised that some of the most harrowing cases involve perpetrators killing their partners to claim a life insurance payout.
Catherine Fitzpatrick, an adjunct associate professor at the UNSW School of Social Sciences and expert engaged by CALI, highlighted the urgency of these reforms.
“Life insurance is supposed to give you peace of mind, but we know that it can be used as a power play by domestic violence perpetrators,” she said.
Fitzpatrick described the recommendations as a necessary step to prevent insurance policies from becoming tools of coercion.
While the guidance is not legally binding, it builds on existing industry standards such as the Life Insurance Code of Practice, which requires insurers to support vulnerable customers. Insurers have until 1 July to determine which steps they will implement.
Ensuring Better Customer Protection and Support
Beyond policy safeguards, the guidance calls for improvements in how insurers interact with customers experiencing domestic violence. This includes specialised training for staff to identify victims under extreme stress and reducing the need for victims to repeatedly recount their experiences when making claims.
According to Christine Cupitt, CEO of CALI, the guidance represents an industry-wide commitment to improving customer care. “I don’t want to understate how important this guidance is … it is an industry-wide concerted effort to improve practice and make sure that customers are treated and cared for by respectful and compassionate human beings.” she stated.
Insurers such as AIA, Allianz Retire+, Zurich, HCF, and MetLife are among the 20 CALI members encouraged to adopt these recommendations. Consumers are also urged to ask their insurers about the protections in place to prevent financial abuse.
