A life insurer breached the Life Insurance Code of Practice when it failed to include financial advice wording in its lump-sum claim payment letter templates, a Notice of Determination by the Life Code Compliance Committee has found.
The committee says it found that the life insurer did not suggest to customers who received lump-sum claim payments to seek financial advice to help manage their claim payments.
It says this oversight impacted 7,065 customers.
The life insurer attributed this issue to an incorrect interpretation of the Code.
The committee notes that as remediation the life insurer:
- Updated its letter templates to include the required information
- Updated and implemented internal process guides
- Provided staff training
The committee says this case highlights the need for all life insurers to conduct ongoing compliance checks “…especially in customer-facing communications, to prevent non-compliance and meet community expectations.”
The full determination states that the breach occurred from 1 July 2017 to 30 June 2023 and impacted customers across all business channels and the following claim types:
- Death & Total and Permanent Disability
- Funeral/Estate
- Income Protection
Click here to read the full Determination.
