ClearView to Pay $1.5M for Poor Direct Life Sales Tactics

ClearView Life will refund $1.5 million to consumers who were sold policies over the phone after ASIC found it used unfair and high pressure sales practices when selling the products directly to consumers.

The refunds will go to 16,000 consumers and follows a review of ClearView’s sales calls which ASIC found also contained misleading statements in the way the company sold direct life insurance over the phone to consumers without personal financial advice.

ASIC found in its review of the sale of more than 32,000 life insurance policies direct to consumers between 1 January 2014 and 30 June 2017, that ClearView sales staff:

  • Made misleading statements about the cover, the premiums, and the effect of any of the consumer’s pre-existing medical conditions
  • Did not clearly obtain consumer consent to purchase the cover before processing the premium payments
  • Used pressure sales tactics to sell the policies

The regulator stated in response to its concerns that ClearView will:

  • Refund full premiums, all bank fees and interest to customers with high initial lapse rates
  • Refund 50 per cent of premiums and interest to customers with high ongoing lapse rates
  • Offer a sales call review to other eligible consumers and remediate if there is evidence of poor conduct
  • Engage an independent expert to provide independent assurance over the consumer remediation program
  • Cease selling life insurance directly to consumers

ASIC Deputy Chair, Peter Kell labelled the pressure sales tactics as ‘unacceptable’ and said “Purchasing life insurance is a key financial decision for consumers, and all the information provided to them must be clear and balanced. Insurers should properly supervise their sales staff and ensure that no misconduct is occurring”.

  • Greg McCurdy

    Wow, fancy an online insurance provider being proven to display high pressure sales practices!!!! What would you expect when the staff are incentivised to “SELL”, and the remuneration structure set-up by the employer gives them no other choice!!!?.
    The Financial Services Industry has a long way to go. At least ASIC is doing something, because the product providers and the industry bodies aren’t, they’re just hiding in a corner and only acting when they get caught.

  • Alleycat

    Well, this will be the tip of the ice berg.
    The FSC and ASIC conned a gullible Liberal government and others to impose LIF legislation.
    This was not to protect consumers, this was not to eradicate a small number of recalcitrant advisers that were proven “churners”, nor was this to penalise the Life companies that supported those “churners”.
    Oh No…. is was designed to get rid of the external advice/distribution industry by introducing draconian legislation that will make it impossible for many to survive providing risk advice only.
    It will allow those members of the FSC to offer inferior contracts to an unsuspecting public, direct, no advice in the interest of making more profits.
    What a fiasco that is, and is yet to get worse following the Clearview example.

    Just remember ASIC, you played an integral part in this situation and should be condemned accordingly for this ongoing sham.

  • emkay

    and yet day in day out we see “real” insurances and its ilk peddling ad nauseum overpriced, sub-standard life cover (with no blood tests or medicals!!!) and ASIC does nothing! Whatever happened to consumer protection? This proves ASIC’s one job is to help eradicate IFA’s to allow the FSC members to increase their profits.

    • Frustrated

      Totally agree! I wonder if there was some way, someone could petition ASIC to carry out a thorough audit of the other direct carriers?

      • XY

        All you have to do is look at the claims statistics… but no, ASIC has bred a culture of cowboys, out to take down the big bad Financial Advisers.

        • Sue Laing | the risk store

          XY, can you please tell us what stats you are referring to? There have been no differentiated statistics published on direct claims as far as many of us are aware…but wouldn’t disagree that they may be a revelation as to how non-underwritten business must be a path to nowhere for many unintelligent/innocent/naive insureds and a sooner-or-later PR nightmare for the direct insurance providers.

          • XY

            Hi Sue, I might have been a bit hasty with that comment. I do remember my Onepath BDM providing me with some information that showed the average sums paid out for their direct, group and retail products. This showed there were more claims on the Retail product as well as higher payouts, when compared to the other two (direct was the lowest in terms of claims and payouts). I can’t recall if the stats showed the amount of successful claims (as a %) though. I tried to dig up the info he provided me, but I must have thrown it out.

  • Jake

    The insurers will learn the hard way that they actually need advisers who act in the best interest of clients. They need us to take the fall as we have on every occasion when there has been a problem with their offering. Look at all the bank advisers who fell on their own sword due to the high pressure sales mantra imposed on them by their managers who also have the same high pressure sales mantra imposed on them. In all cases the adviser was just doing what his bosses told them and rewarded them for doing.

    When ASIC successfully rid the industry of Insurance Advisers who will they target then? They cant target the sales staff of the direct insurers as they are generally backpackers or students with no intention or need to act in the client’s best interest and who just want the sale so they get paid a bonus. They have no intention of ever helping the client through the claim as they know the claim is unlikely to ever be paid. ASIC are going to have to go after the insurers directly and as they have no advisers to pursue they will have to pursue the managers and CEO’s.

    Insurance Companies, you have brought this on yourselves for the short term bump in profits due to being able to sell your junk direct with no compliance and without ever having to worry about paying claims. Its all going to come crashing down with class actions and massive fines industry wide.

    Ill sit back on my recurring income and have a laugh. Pity that so many consumers will be left financially ruined. They can blame ASIC for removing their access to Insurance Advice and promoting the Direct Sharks.

    Class action against ASIC anyone???