In a teleconference call yesterday, ASIC deputy chair Peter Kell said claims handling is specifically excluded from financial services consumer protection law under the Corporations Act, and this also stretches to consumer experiences of a claim.
“The government has agreed to look at law reform for life insurance claims,” Mr Kell said.
“As we have set out very clearly in relation to this matter in our report and more broadly for the industry, the legal exemptions that this industry currently enjoys for claims handling, in ASIC’s view, should be removed.”
Mr Kell also noted ASIC’s determination that having out-of-date medical definitions is not against the law.
He said ASIC was specifically exploring potential legal breaches in CommInsure in justifying why it did not interview individual customers as part of its investigation.
“It was not necessary in this investigation to interview individual consumers to address our primary objective, which is to determine there were breaches of the law,” Mr Kell said.
“If you look at ASIC’s industry-wide report on insurance claims handling that we released late last year, it set out more than 20 consumer case studies in that report.
“We speak directly to consumers on a very regular basis, but it’s not unusual as part of the formal investigation that there isn’t a requirement for consumers to be interviewed, and we make that decision based on the facts before us and the nature of the allegations and the relevant law.”
In response, CommInsure said in a statement that ASIC’s report established that various improvements have been made in the CommInsure business over the past year.
“We will be examining the findings closely as we always know we can do more to enhance the customer experience,” CommInsure said.
“We recognise the industry is evolving and we expect, and will advocate for, further industry reform to make life insurance simpler and better for customers.”
One can’t help wondering about ASIC and the way they go about overseeing our industry. If you believe what has been said by sources who should be in the know, it took them over a year to finally ‘listen’ and then commence an investigation into CommInsure and its business practices. Only last week ASIC expressed concern that the banking industry did not do enough to entice consumers to move their loans to a different and ‘better’ [read ‘lower cost’] product/provider. Were I to put in my SoA the only reason I replaced a policy was due to it being lower cost I would be pulled up by ASIC were they to audit that client file. And ASIC did not appear to have an issue with mortgage brokers earning their income [basically] all up front – yet upfront commission for our industry were a ‘no-no’. Even though I have written some 95% of my clients on Hybrid comms since 1993 – there were still valid reasons that in 5% of cases I needed to take upfront comms to cover my costs and to deliver the best outcome for my client.