ASIC has commenced civil proceedings in the Federal Court alleging that three types of insurance policies issued by HCF Life Insurance Company contain unfair contract terms and could mislead the public.
A statement from the regulator says the case involves standard form contracts issued under HCF Life’s ‘Recover’ range of insurance products.
ASIC states it alleges the ‘pre-existing condition’ term in the contracts is an unfair contract term and could mislead the public because:
- The term purports to deny coverage if a customer did not disclose a pre-existing condition before entering the contract, and a medical practitioner forms an opinion that symptoms of the condition existed prior to the customer entering into the contract, even if a diagnosis had not been made
- The term suggests that HCF Life can deny coverage even if the customer was not aware of the pre-existing condition
- S47 of the Insurance Contacts Act prevents insurers from excluding coverage for non-disclosure of a pre-existing condition where the customer was unaware of the condition when taking out the insurance, and a reasonable person in the circumstances could not be expected to have been aware of the condition
ASIC Deputy Chair Sarah Court says insurers “…need to ensure that all terms in their contracts, including important pre-existing condition terms, accurately communicate the rights of customers.”
She says the inclusion of “…allegedly unfair and misleading terms can deter customers from making a claim, which is not a good consumer outcome.”.
Court adds one of ASIC’s Enforcement Priorities is taking enforcement action with respect to unfair contract terms, including in insurance products.
She states that given the expansion of the unfair contract terms regime, in April 2021, includes insurance contracts “…ASIC’s current focus on enforcement action concerning unfair contract terms should not come as a surprise.”
…potentially unfair terms should be removed from … standard form consumer contracts…
“Rather, it should serve as a reminder to providers of financial services, whose contracts are subject to the regime, that potentially unfair terms should be removed from their standard form consumer contracts,” Court notes.
ASIC adds it is seeking declarations that the term is void. ASIC will also seek injunctions and corrective orders. Further, ASIC is seeking a penalty regarding the allegation that HCF Life’s contracts are liable to mislead the public.
A quick glance at the HCF Recovery PDS, provided under that wonderful arrangement of general advice, reveals that there is no definition of pre-existing condition listed in the glossary. Perhaps it is in the policy document?
DDO was supposed to protect consumers from rubbish like this. How’s that working then?
In any event, this action by ASIC should be once again a warning to people who advise on risk to make “all reasonable inquiries” and just don’t take the clients word when he/she informs you that they already have “life insurance”, and it’s with HCF or similar organisations who flog a better life cover on the side because it’s easy money when you don’t have to provide personal advice.
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