The Australian Securities and Investments Commission (ASIC) has found that CommInsure did not break any laws in its handling of claims but was critical of its use of out of date medical definitions.
In releasing its report into its investigation of CommInsure, ASIC also stated that it found no evidence to support allegations that the insurer applied pressure on doctors to change medical opinions.
ASIC said it also found there were no breaches of the law in the CommInsure surveillance processes and neither was there any compromise of a CommInsure database.
ASIC will, however, continue an investigation into whether CommInsure advertising and promotions of life insurance policies to consumers prior to March 2016 contained potentially misleading or deceptive information.
Regarding the issue of the outdated medical definitions for heart attack and rheumatoid arthritis the report states, “ASIC found that there is no legal basis for us to take enforcement action in relation to this concern.”
“ASIC found that there is no legal basis for us to take enforcement action in relation to this concern.”
“This is because the law allows the insurer to set out the cover its policy provides and to define what it means by various terms including medical terms. Under the law, it can use definitions that are out of date, as long as it clearly discloses those definitions in the policy,” the report stated.
The regulator said an insurer could also continue to sell policies which have outdated definitions and while this was also not against the law “…it is clearly out of step with community expectations, given that consumers cannot be expected to know whether a medical definition is already outdated when they purchase life insurance”.
“As set out in our broader review of life insurance claims handling, this is an industry wide issue that needs to be addressed, including through the recently announced Life Insurance Code of Practice,” ASIC stated in the report.
In response to the investigation, CommInsure has stated it would further backdate the application of its updated heart attack definition to October 2012 after having previously backdated them to May 2014.
CommInsure would also make improvements in the areas of better and more timely communications with consumers and enhanced training and assistance for claims managers, after these were identified as areas of concern by ASIC.
The effectiveness of the changes will be examined under an implementation review conducted by an independent expert in mid-2018.
ASIC’s investigation into CommInsure began in April 2016 following allegations made in mainstream media a month earlier that the insurer had was using outdated medical definitions, ‘cherry-picking’ doctors to support a particular claim decision strategy and deliberately delaying decisions about claim outcomes.
The investigation included an examination of around 60,000 documents, interviews with the financial and legal advisers of CommInsure clients, reviews of client files from CommInsure, the Financial Ombudsman Service and the Superannuation Complaints Tribunal and consultations with APRA, external legal advisers and independent expert medical advisers.
Its pretty much impossible to rule against the banks. So ASIC just found that they acted within the law and pressuring medical professionals to assess claims a certain way is just part of the process. The only reason that no heads rolled for this is because there were no advisers to take the fall. Who are ASIC going to go after when there are no Risk advisers left to blame for everything? they do not have the funds or resources to take on the big banks.
Without advisers to assess the quality of the policy, clients are just going to go for the cheapest policy they can find. There will be no independent adviser telling the client that this policy is rubbish and they will only find it at claim time when its too late.
After the inevitable demise of the Independent Risk Adviser insurers will be able to put anything in their contracts. I might even make my own insurance policy and in the PDS ill have a statement “claims will only get paid if in our opinion you are disabled”. Oh that’s right, this statement is already part of most TPD contracts.
The only group who are legally required to act in the clients best interest are the Advisers and ASIC/ FSC are going out of their way to remove the consumer protection so the insurers are able to flog their cheap and rubbish policies without any need to address any issues other than their own bottom line.
Its a race to the bottom and the only beneficiaries of LIF are the insurers and the lawyers.
I cannot believe that ASIC thinks its ok to remunerate claims staff based on the claims they decline but believe advisers should be fee for service on all insurance policies.
@ Jake,
All you have said is correct.
I expect that the Direct insurance promoters should be made to put at the top of every application “When you pay your money to us, … you take your chances”.
Mind you in some cases that already happens without the statement in writing, but it’s clear from the Comminsure experience, using antiquated definitions, that’s the case anyway.
Perhaps ASIC should really do their job and insist that the wording be placed at the top of every application sold Direct.
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