December 18, 2017
ASIC has concluded a long running investigation into the advertising of CommInsure life insurance products by requiring the insurer to pay $300,000 to a consumer insurance advice service.
CommInsure will also be required to commission an independent external firm to conduct a compliance review of its advertising sign-off processes and ensure they are compliant with the ASIC Act, and will report to ASIC by 30 June 2018 on the results of the review and any changes made following the review.
The $300,00 payment will be made to the Financial Rights Legal Centre to use with its Insurance Law Service which provide specialists consumer insurance advice to vulnerable, low income and disadvantaged consumers.
ASIC reviewed advertising…and found that misleading and deceptive statements were likely to have been made…
The actions by CommInsure follow an investigation by ASIC into the advertising of two life insurance products, Total Care Plan – sold through financial advisers, and Simple Life Insurance – sold directly to consumers.
Under the investigation, ASIC reviewed advertising from mid-2013 to March 2016 and found that misleading and deceptive statements were likely to have been made about the extent customers would be entitled be covered for trauma if they suffered a heart attack.
ASIC stated the advertising may have led policyholders to believe they were entitled to a lump sum payment if they suffered a heart attack but only specific types of heart attacks, measured by medical criteria defined in the policy, were covered.
These medical definitions were the subject of mainstream media coverage and in an earlier stage of its investigation ASIC stated the medical definitions were ‘out of step with community expectations’ but CommInsure did not breach the law (see: ASIC Finds CommInsure Claims Did Not Breach Law).
In March 2016, CommInsure updated the definition of heart attack in its trauma life insurance products, backdating it to October 2012 – the date at which international cardiology bodies published an updated consensus on the appropriate clinical marker for heart attack.
ASIC stated as a result of this backdating, CommInsure has reassessed past claims and has paid approximately $4 million in additional benefits for 32 claims.