In a statement today, ASIC said CommInsure had trauma policies with medical definitions that were out of date with prevailing medical practice, specifically for heart attack and severe rheumatoid arthritis.
However, this was not against the law, because the law allows an insurer to set out the level of cover its policy provides, including out of date medical definitions as long as these are clearly disclosed in the policy, the statement said.
“Insurers can sell consumers policies which already have outdated medical definitions,” ASIC said.
“Although this is not against the law, it is clearly out of step with community expectations, given that consumers cannot be expected to know whether a medical definition is already outdated when they purchase life insurance.”
ASIC also noted that, as life insurance is a long-term product, a consumer can end up with a life insurance policy where previously current medical definitions have become out of date over time.
“This occurs because life insurers are legally required to maintain a consumer’s cover, and cannot easily update a policy or change its terms,” ASIC said.
“While this is an important consumer protection, it creates a ‘legacy products’ issue in the life insurance industry.
“The government is considering this industry-wide issue further in response to a recommendation of the Financial System Inquiry.”
ASIC said it found no evidence to support allegations that CommInsure claims managers applied undue pressure on doctors to change or alter their medical opinions.
However, there were a number of areas where CommInsure needs to make improvements to its claims handling processes. These improvements, which were also identified by Deloitte, include better and more timely communications with consumers as well as enhanced training and assistance for claims managers.
“ASIC will work with CommInsure to make sure these improvements are implemented as quickly as possible,” the statement said.
“ASIC has requested CommInsure to undergo a further implementation review by an independent expert in mid-2018, to test the effectiveness of the changes, and provide additional assurance that CommInsure is making the necessary improvements to its business. CommInsure has agreed to this request.”
Further, ASIC said it is continuing to investigate concerns that CommInsure’s advertising and promotion of life insurance policies to consumers contained potentially misleading or deceptive information in the period before March 2016.
“We will provide a further update on this aspect of our investigation when appropriate,” the statement said.
No banning the CBA hey ASIC!
If people are referring to the gentleman who had a 20 year old trauma policy. Remember this policy was written prior to guaranteed upgrade even being a thing in the market. Of course it had out of date definitions.
ISA adviser bashing press release saying its a disgrace in 3…2…1….
And then Adele Ferguson writing another piece about how the regulator is in the bank’s pocket, and calling for an RC like anonymous below…
You spoke to soon, Adele Ferguson has been working on “that” piece all afternoon, posted up late this evening reading for the morning news. Bizarrely on the ABC online the whistleblower and his lawyer was now making some strange allegation about commbank paying off comminsure witnesses interviewed by asic.
If ASIC really looked further they would find against the law issues but of course the ASIC will just keep their eyes closed just enough not to find any issues.Of course the ASIC will never find the CBA break any laws.But of course just to add one does not necessarily need to break the law to be unethical..TIME FOR A ROYAL COMMISSION AND GET IT OVER AND DONE WITH
So is ASIC’s role to enforce the existing law? Do you think that charges that werent covered by the law would be allowed to stand when reasonably challenged in court? ASIC have found that all the banks have broken the law in different areas in recent years, they’ve fined them, placed EU’s against them. How is this not doing what it’s supposed to be doing? An just how is an RC going to do more than the regulator? Putting it in caps doesnt carry any more weight…
I agree with anonymous yes it is the ASIC role to enforce the law and give confidence in financial markets [look under what do they do] ASIC has not found the banks break the law it is either the media or the internal investigations of honest people in honest companies.It is against the law and up to 10 jail time to falsify documents.If the ASIC really did their job they would have a number of other advisers locked up but they choose who they go after.Funny how the CBA committed fraud by manipulating client files as uncovered by Jeff Morris and the media NOT THE ASIC. so Jimmy you picked up on the caps. you must have taken notice I also agree with a royal commision
Insurance advice – scoped out since 2015
If ALL insurers selling Trauma products were required to provide Automatic upgrades of definitions ( or at least update the Core definitions) , without the usual caveat of NO premium increases, then the “market ” would ensure definitions would be updated. Of course the “market ” needs risk specialist advisers to put constant pressure on insurers. No risk specialist advisers, no market ! Just what the banks wanted from THEIR Government.
A minimum industry standard for the 4 core trauma conditions that account for 80% of claims is required.
CommInsure has been profit-taking on their existing book for a while now, with little effort at serious new business outside their bank channel. As we also know, this was exacerbated when some of their better existing business walked out the door when it was targeted by a competitor. This put pressure on their margins, which meant underinvestment in product and pressure on claims. Now it’s come back to bite them.
Sadly there won’t be any Specialist Risk Advisers in a few years as we are being pushed out of the industry. We have recently been dealt a death blow by the twin forces of significantly reduced income (near halving of commissions) AND a DOUBLING of the clawback period. These combine to make a risk adviser’s business totally uneconomical and financially unsound. The clawback provision, specifically, ensures we never have certainty over earned income. Just think about that for a moment – for 2 years an adviser won’t know if he gets to keep income already earned. Should include life company execs in that little scam eh?!! Dock their wages/bonuses when the client cancels a policy as the execs have benefited from the client as have the advisers – and every employee in the life company. Dock them all or nobody – including advisers.
Good call ASIC, don’t want to throw the baby out with the bathwater…