ASIC Sues MLC For ‘Multiple Insurance Failures’


ASIC has commenced civil penalty proceedings in the Federal Court against MLC Limited for “…insurance policy and service failures resulting from poor systems and controls.”

The commission claims in a statement that “…MLC’s failure to implement appropriate systems and controls resulted in unpaid insurance benefits, premiums being charged without notice and underpaid refunds. ASIC alleges MLC’s [self-reported] conduct led to over $17.5 million in financial harm to over 260,000 customers.”

ASIC Deputy Chair Sarah Court says that consumers should be able to trust insurers to pay their full benefit in times of need and keep them informed about significant changes to their policies.

Sarah Court.

“This case alleges failures by MLC, over many years, to ensure a reliable delivery of basic and everyday insurance services.”

She says that insurers need to make sure they have adequate systems and controls to manage risk and administer their insurance policies correctly.

“Too often, we are seeing consumers harmed by implementation issues, legacy IT systems and failures resulting from poor governance and culture.

“ASIC will look to take enforcement action to ensure these systems improve,” concluded Court.

ASIC alleges that from 1999 to November 2020, MLC failed to:

  • Pay a life insurance benefit, known as a ‘rehabilitation bonus benefit’, to 297 eligible customers who were undergoing rehabilitation following an insured injury or disability
  • Update its definition of ‘Severe Rheumatoid Arthritis’ in a timely way, resulting in 12 customers suffering from Severe Rheumatoid Arthritis being denied insurance cover and MLC having to update the definition in over 190,000 insurance policies
  • Notify over 800 customers that their annual premiums had increased, their premiums were overdue, or that their insurance policies had been cancelled or lapsed
  • Fully refund premiums to over 260,000 customers who had cancelled their loan insurance policies or paid out their loans.

ASIC claims that MLC breached its obligations as a financial services provider and its duty to act with the utmost good faith when handling claims.

It says MLC has advised ASIC that it has remediated customers impacted by the alleged conduct.

MLC Statement

MLC Life Insurance says in a statement that it acknowledges the proceedings announced by ASIC “…in relation to four historical breach events involving systems and control processes.”

It states that these events were self-reported to ASIC by MLC Life Insurance.

“Following our internal investigations, all impacted customers were fully compensated and the events remediated and closed.”

The statement says the insurer takes its “…responsibility to deliver on our customer commitments seriously. Where we fall short in doing the right thing for our customers, we communicate with them and remediate our errors promptly.”

The statement adds that in recent years, the company has invested more than $650 million in its technology transformation, including digital and data, infrastructure and support services.

“We are continuing to invest in order to better serve our employees, advisers, our superfund clients and their members.”

It says too that MLC Life Insurance will “…carefully consider the claims by ASIC and is committed to working constructively through the legal process.”

The statement notes that MLC Life Insurance is part of the Nippon Life Group of Companies and is not a part of the MLC Wealth or IOOF groups of companies.