Freedom admits to dodgy policy retention practices
Freedom’s retention practices make it “unnecessarily difficult to cancel [insurance] policies” with only 28.5 per cent of customers calling the insurer to cancel their funeral insurance cover ultimately succeeding in doing so despite citing financial difficulty as a key reason for wanting to.
Freedom began recording the reasons for attempted cancellations in March, with evidence tabled before the Banking Royal Commission today showing that 47 per cent of those attempting to cancel were doing so because they said they could not afford the cover and 28 per cent because they did not want the cover.
Senior Counsel assisting the Commission, Rowena Orr QC, questioned why so many people were pushed to retain cover in spite of giving the above reasons as to why they could not.
In response, Freedom chief operating officer, Craig Orton, acknowledged that “there’s a difficulty in cancelling now that needs to be sorted”.
“Retention has been too strong … has perhaps offered too many options and gone too far,” he said. “It’s a focus of the company and a focus of mine to change this.”
Having listened to recordings of some retention calls with customers, Orton said that he knew there was an issue with retention agents “not taking no for an answer”. He also previously acknowledged to the Australian Securities and Investments Commission (ASIC) that there were issues with “the tone and manner in some conversations”.
Focusing on retention practices, Orr pointed to a guide by Freedom for retention agents which instructed them to question callers cancelling for the above reasons on what plans they had in place to cover their funeral costs should they pass away unexpectedly.
Orr also tabled copies of instant messenger conversations between Freedom staff members following complaints by Grant Stewart regarding his disabled son’s insurance cover, the details of which the Commission heard yesterday. In these messages, one employee referred to Stewart as a “bloody whinger”.
Orton acknowledged that both these examples showed “inappropriate retention practices”. Regarding the comments about Stewart, Orton said the conversation was “totally inappropriate, there’s not much I can say about this one … it’s totally unacceptable and against the cultural values that I expect of our employees”.
Orton said the company planned to improve its retention strategies going forward by removing commissions for retention agents, which he admitted sometimes exceeded those of sales agents.
He also said that sales practices would change to make funeral cover opt-in at the end of the current 12-month free period, but said that agents would “still have responsibility to explain options to customers then”.
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