ASIC to launch industry-wide probe into life insurance

Following the CommInsure scandal, ASIC has said it will launch a wider investigation into claims handling across the life insurance sector to determine whether similar problems exist elsewhere. 

Addressing the Parliamentary Joint Committee on Corporations and Financial Services yesterday, ASIC deputy chair Peter Kell said the corporate regulator was asked by Assistant Treasurer Kelly O'Dwyer to investigate the allegations against CommIssure.

She also requested that ASIC conduct a broader review of the life insurance industry to uncover any other systemic issues, Mr Kell said.

"The aim of our review is to determine whether there are indicators of systemic problems in claims handling across the life insurance sector. We want to, at this stage, undertake a review that is not going to extend over a long period of time," he said.

"We want to be able to undertake that initial review within a few months to get that first indication of whether there will then need to be some more in-depth examinations."

As part of the industry review, Mr Kell said ASIC will be working with APRA, the Financial Ombudsman Service and the Superannuation Complaints Tribunal as well as with the life companies individually.

"We will be using information sources to help establish whether there are red flags or warning signals," he said.

As for CommInusre, Mr Kell said that probe has already begun, with ASIC requesting information around its policies. He added that ASIC will want an independent review of CommInsure's files and data management.

"We have a focus as well on ensuring that there is a review of relevant client files, claims and that is something that is a priority for us," Mr Kell said.

"So it is early days but there will be a thorough investigation."

Mr Kell said the regulator will be looking at any bonuses or incentives within CommInsure that might have led to the purported behaviour.

"It's important in this matter," he said.

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+2 #10 Reality 2016-03-18 11:41
Bill, clients generally feel they are being 'sold too much insurance' until they need it... Then they wish they could turn back to clock and listened to the adviser and their needs analysis.

I have fee for service insurance clients (no commission) and they still think I am 'selling them too much' although I have no incentive to do so.

As an adviser you are doomed if you do, doomed if you don't. There has been claims against advisers in the past for not 'convincing a client they needed more cover although the client went against their recommendation' .
+1 #9 John Edwards 2016-03-18 11:38
The comments by Bill are very helpful in understanding the flaw in this debate. No industry and no business attempts to attract 100% of the market place. Businesses offer a service and target a segment of the market to create a win win outcome. Advice practises have no interest in people with Bill's attitude. This is not a personal attack on Bill. It is a fact of life. We should therefore stop trying to provide a solution for Bill. Let him work it out for himself. He owes us nothing and we owe him nothing. So Bill if you don't want to use an adviser. Don't. Goodbye.
+1 #8 Scott 2016-03-18 10:26
It is too easy to direct this to Industry Super, bank planners and financial planners in general. At the end of the day if the accusations are correct it was deliberate fraud by CBA to not pay claims. This should be investigated and action taken against CBA and any other insurers and trustees (who have a duty of care to their members) responsible should the accusations be correct. I however have no faith in ASIC to do this form of review (given the claims have been around for a while already) with it sure to end up in a recommendation for level commission payments in 2018 given this is what ASIC appear to be aiming for and they have a record of completing research which backs up their preconceived ideas.
-5 #7 Bill 2016-03-17 21:31
This should have been central to the FoFA investigation. Planners are clearly incentivised to sell clients as much insurance as possible given they get up to 130% of the first year premium and then a trailing commission. This is often not in the clients interest as the fees/premiums erode super balances. Who pays in the end? Taxpayers through the aged pension! I have been through two planners and interviewed many. All I met were the same - all wanted to change my super and life insurance. What a surprise. The industry is a joke and I believe, most people are better without them. Have a question, ask an accountant for a fee. Do we have a doctor on a retainer? No. We see them when required and pay for the visit. I digress. I'm sure insurance companies are trying to claw back money through refusing claims as a result of these commissions. The future will be disintermediati on and fintech. Planners, as they are currently remunerated, will be a dying breed as a result.
+6 #6 Reality Check 2016-03-17 17:03
If ASIC conduct a proper review they will find that the majority of claims being denied lie within the conduct and processes of the group and direct markets not advised business.
But guess what Kelly O'Dwyer and Peter Kell? you have just brought in reforms under the LIF that force more business towards the group and direct markets and less via advisers who now can't afford to stay in business. A job well done by you both. What an absolute farce!
+1 #5 Jeff 2016-03-17 16:04
ASIC are an embarrassment and the CBA will be shaking in their boots.
Mr Kell - time to quit and go sling your hook at the FSC. They always have room for another good man.
+1 #4 David from Perth 2016-03-17 14:55
If its an investigation like they do with fellow pollies then nothing will come out of this except paying people to do this. God they should so look at themselvs.....
-1 #3 RT 2016-03-17 13:10
Jeff, I'm sorry but you are so wrong. CommInsure IS part of the industry. And they and the other insurance companies, fund managers and instos owners have a direct influence and impact on the whole industry. And advisers have to accept that perhaps not so much what they are doing today but t's what they have been doing over decades that has created much of the poor appearance of the profession and the industry as a whole.
Its also ignorant of us to continue to push blame onto the industry funds or for that matter salaried bank advisers. We have all been part of public perception and the very public infighting between the various channels (and that includes advisers continually blaming accountants) and trying to push blame on each other only adds to the poor perception and increased scrutiny.
Directly to ASIC's probe, I think its about time. There are some absolutely outstanding client centric specialist risk advisers have I have had the absolute honour to work with but there are far too many "part time" risk advisers who frankly don't have the best subject expertise and a raft of old riskies who still rely on the "bi-annual client policy reviews" that result in suspect ROA policy switches. Too bunt? Not really, the truth just burns sometimes.
The outcome of any review will only benefit the true professional risk advisers.
+8 #2 Jeff 2016-03-17 11:02
What an absolute farce this ASIC mob are, and Kell, isn't he the one who stood up at a conference some years ago and when asked the question, 'have you had discussions with financial planner", his reply was, 'Oh, I don't need one' and went on to basically recriminate planners in front of the audience, consisting of planners and advisers. As for an inquiry into claims, how about someone bang some common sense into these people and make them realise that this CommInsure issue has nothing to do with the industry as a whole and direct their analysis at the Industry Super funds where this all began.
+8 #1 Dean 2016-03-17 10:39
Let's hope this review gets to the bottom of the unsustainable Comminsure insurance offerings in union super funds like HESTA & Care, and the role of salaried union super employees in advising people to purchase that insurance.

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