In a submission to the Senate Economics References Committee Scrutiny of Financial Advice inquiry, the bank addressed issues raised after a joint Fairfax Media and Four Corners report highlighted instances of claims mishandling within CommInsure.
CBA said those reports do not represent an “accurate reflection” of its culture and ethics.
“We do not tolerate behaviour that could put the financial wellbeing of the customers, businesses and communities we serve at risk. To date, we have not identified any instances of malicious staff misconduct which has led to the decline of a claim,” the submission stated.
The bank also rejected allegations that whistleblower Dr Benjamin Koh was fired for raising concerns about business practices.
“Dr Koh was dismissed for serious and repeated breaches of customers’ privacy, involving highly sensitive personal, medical and financial information over a lengthy period of time. His statements and associated conduct during the investigation of his breaches were also misleading,” CBA said.
“The investigation found that Dr Koh sent around 230 emails, attaching a total of around 260 documents, to his personal Gmail account. The emails were unencrypted and included sensitive customer files, medical reports, financial information and CommInsure corporate information.”
As for accusations regarding the destroying of medical documents, CBA said it has not found any evidence to support this.
“Based on investigations at the time, we did not find any evidence of medical files being intentionally deleted or tampered with resulting in missing information, as has been alleged,” the submission stated.
The bank, however, did admit “it could have done better” in other areas, such as updating definitions. It said it has accelerated an upgrade to its heart attack and severe rheumatoid arthritis definitions in its trauma product.
About 100 customers since 2014 are expected to benefit from this update.
“The product disclosure statements relating to these definitions for new customers have now been updated and coverage has been backdated and applies for all claim events from May 2014 onwards,” the statement said.
“May 2014 was the date of the last relevant product disclosure statement for the trauma product. On the basis of actuarial estimates we expect up to 100 customers will benefit from the backdating of these upgrades.”
I think the main point is being missed here. Read about Agency theory and the very entertaining article by Steven Kerr – The Folley of rewarding A while hoping for B. For example, the MD of CommInsure is rewarded for profitability. All others who are supposed to make independent decisions on claims either directly or indirectly are under the MD’s control. You do the maths taking into account the rational behaviour of any individua who needs to pay mortgages and bills! Dr. Koh put that at risk for his integrity and professional ethics. It is the incentives, every single time that trips us up.
Craig, are you paid based on a percentage of the insurance premiums that you recommend to your clients? Does that lead to potential bias in your recommendations, in that the higher the cover, the better you get paid? How do you manage these potential biases if they exist? Wouldn’t it be better to charge a fixed fee for your work, to remove the potential for bias or conflict of interest? In any of your successful claims, did you also help the client invest the money on percentage based remuneration? Where does it all end?!
The way I see it is that if it wasn’t for Dr Koh and the 4Corners program there would still 100 Comminsure customers that wouldn’t be getting the payout that they should have got from CBA .
So shame on you CBA for waiting till this got exposed to address your processes.
Craig, sadly, I cannot produce any shred of evidence in support of the CommInsure staff and nor can you produce a shred of evidence against them. However, consider this: many medical professionals work with such incentives. I have recently found that my GP has an ‘incentive’ (a referral payment) to send me to certain other medical specialists (audiologist, dietitician, etc) for treatment. Does this arrangement cause me to doubt my physician’s care of me as his patient? No, it does not (although I am somewhat peeved that he doesn’t have to formally disclose this in writing the way we, in our profession, do). Perhaps for you it would cause doubt, you seem to have such little faith in others to act ethically or professionally. But then, we always see what we want to see, and no argument by me in defence of these slandered staff is likely to incite your compassion for the heart-wrenching muck-raking that main stream media have put them through.
Cynical, you are incorrect in suggesting I am making a supposition that there was any deliberate action or behaviour of anyone at CommInsure that may have disadvantaged any claimant at all.
If you are suggesting that I am like the
4Corners crew,simply by asking for clarification as to what form and on what criteria incentives or bonuses may or may not be paid to ANY insurance company claims staff or employed specialist staff, such as Chief Medical Officers, then you are again mistaken.
I believe that consumers would be concerned if a Chief Medical Officer employed by an insurer was able to qualify for or receive financial incentive payments over and above their agreed remuneration, when their role was to provide specialist medical assessment.
I have also had claims for clients paid by Comminsure very efficiently and many other insurers also over 25 years.
In fact, during that time, I have had very few issues with the assessment or payment of any genuine claims and I have found the vast majority of claims staff to be highly efficient and compassionate.
However, it appears you cannot clarify that if incentive payments are made to claims assessment staff or in fact to specialist employees such as Dr.Koh, on what basis and criteria they are made and whether the payment could or could not have the potential for bias.
If you would be obliged to provide the shred of evidence required to hopefully prove there is no bias, influence or conflict that could be attributable to an incentive based payment, then please put it out there as soon as possible so that everyone can be assured.
I believe that consumers would be concerned if a Chief Medical Officer received an incentive payment based on either revenue,productivity or profitability.
Well Craig, another term for short term incentive is ‘bonus’ and it’s hardly an uncommon concept among employees. Many people have them – they may relate to such KPIs as revenue, productivity, staff engagement, customer satisfaction, etc. You are making a supposition that an incentive has created a situation where clients were deliberately screwed over without a shred of evidence, and like the 4Corners crew, are harming the reputation of hundreds of hard working staff at CommInsure. Personally, I’ve had claims experience with these staff and found them to be compassionate, caring and efficient. I think the real blame here lies in the cheap skate attitude of industry funds who contract insurance companies to provide cut down versions of their actual products so that they can foist this insurance unasked for onto their members, and stitch up a little more profit.
In a Sydney Morning Herald article dated 10th March 2016, Dr.Koh stated that had he retained his employment with CBA as the Chief Medical Officer, he would have been entitled to a yearly,short term incentive as defined in his contract.
Was this annual incentive to a Chief Medical Officer a financial benefit and if so, on what basis would a person in his position be paid an ‘incentive” ?
An “incentive” to attain KPI’s regarding a completed volume of workflow ?
An “incentive” based on the annual profitability of his department ?
It is understood that Dr.Koh would have been employed to provide his professional medical expertise and opinion in the assessment of claims.
It is difficult to understand how incentives could be appropriately structured and whether providing incentives to professionals in positions such as Dr.Koh creates a conflict between their employed role and their assumed unbiased professional medical opinion.
The question that needs to be clarified is whether financial incentives are paid to any claims assessment staff, management or medical professionals employed by any insurance company and if so, whether this, by it’s very nature has the potential to create an inappropriate environment regarding the assessment of claims, dependent on what constitutes the basis and criteria for the incentive.
Whoa there Deano. We all know that the estimates of timeframes in terms of terminal death cases are a well considered guesstimate based on the experience of the medicos, their past experience with similar cases, etc. Its NOT an exact science.
Its also well known that people can somehow at times manage to sustain themselves against what seems possible for the human body. Cases where people somehow manage to stay alive long enough to attend a wedding, family event or some other milestone.
That fact that they lived past 12 months is irrelevant to the original assessment at the time the application was made. Perhaps in the case you mentioned, the insured stayed alive to see justice done under the terms of his policy, to see his family was provided for.
It would be interesting to see if you would be happy for you or one of your family members to be treated in the same manner…
Has CBA published any explanations of the specific cases on 4 Corners?
I’d be very interested to know how CBA is at fault in the case of someone who has been fighting a terminal illness claim for 3 years so that he has money to provide for his family when he dies?
Surely if the insured has been fighting it for 3 years, it doesn’t fall within the definition of terminal illness. And since terminal illness is essentially a bring forward of a death benefit, his family will get the money when he dies anyway?
Good on you CBA for trying to draw a distinction between actual internal wrongdoing, and the media exaggerations and smears.
If you keep letting the media smears run, they will just snowball. What a pity you caved in on the Couper case a few years ago rather than taking the time and effort to properly defend the financial planner involved.