MLC Life Insurance faces a $10 million penalty for misleading customers and failing to provide promised benefits.
The penalty was ordered by Justice Moshinsky on Thursday 18 May at the Federal Court in Melbourne for failing to pay policy holders due to a lack of appropriate systems to administer its products.
In addition to the penalty, MLC Life Insurance has provided approximately $11.8 million in remediation to approximately 1,000 impacted customers.
The Court also made declarations that MLC Life Insurance had contravened the ASIC Act, the Corporations Act, and the Insurance Contracts Act for failures to:
- Pay a rehabilitation benefit to 119 customers who had undertaken approved rehabilitation programs following injury and/or disability
- Have adequate processes to review and, if appropriate, promptly update its medical definitions for critical illnesses in certain policies
- Adequately train and monitor staff about communications to customers regarding the administration of their policy, including policy schedules and premium notices.
…customers should be able to trust that their insurer will pay the benefits promised…
Following the release of the judgement, ASIC Deputy Chair, Sarah Court, said customers should be able to trust that their insurer will pay the benefits promised and keep them properly informed if there are changes to their policies.
“The failings recognised by the court are the result of poor governance, poor controls and poor systems, such as legacy IT systems,” she said.
Riskinfo understands the breaches are historical events that were self-reported to ASIC by MLC Life Insurance. The insurer has subsequently invested $640 million in a technology upgrade intended to deliver more efficient policy administration and to reduce the possibility of a recurrence.
MLC Life Insurance has issued a full apology to its affected customers, all of whom have been appropriately remediated.
