Following an investigation by the corporate watchdog, The Colonial Mutual Life Assurance Society (trading as CommInsure) has pleaded guilty to 87 counts of offering to sell insurance products in the course of unlawful, unsolicited telephone calls, contrary of the Corporations Act.
In an announcement, the Australian Securities and Investments Commission (ASIC) said CommInsure, had conducted a remediation program and would refund $12 million for unfair life insurance telephone sales to around 30,000 customers.
Between October and December 2014, CommInsure, through its agent, telemarketing firm Aegon Insights Australia Pty Ltd (Aegon), unlawfully sold life insurance policies known as Simple Life over the phone. CommInsure provided customer contact details to Aegon from CBA's existing customer database though the CBA customers had no requested to be contacted for the sale of Simple Life by CommInsure, or persons on CommInsure's behalf, or to receive marketing information from CommInsure.
In all of the 87 calls charged, CommInsure did not comply with the requirement to offer the customer the option of having the information required to be included in the product disclosure statement (PDS) for Simple Life read to them prior to the offer to issue or sell the product.
In 14 of the calls charged, CommInsure also failed to meet the requirements to:
- Give the customer a PDS before becoming bound to acquire Simple Life; and
- Clearly inform the customer of the importance of using the information in the PDS when making a decision to acquire Simple Life.
The refunds were to policyholders who were Commonwealth Bank customers between 2010 and 2014 and were sold a range of life insurance products via telemarketing calls by Aegon Insights Australia Pty Limited (formerly known as Aegon Direct Marketing Services Australia Pty Ltd) (Aegon).
ASIC said it identified concerning sales practices by CommInsure concerning the sale of its accidental death insurance product called ‘Accident Protection’ including that:
- Almost half of all policies sold in 2012-13 were cancelled by the consumer during the cooling-off period or within six months, suggesting consumers may have felt pressured to buy the policy then realised they did not want it or could not afford it;
- Inadequate or unclear descriptions of the product were given, which was particularly concerning due to the extremely limited cover provided by the policy;
- Sales were completed in as little as eight minutes, raising concerns about how the consumer could have made an informed decision about a complex insurance product; and
- Sales representatives often selected the level of cover on behalf of the consumer, further reducing the likelihood that consumers were getting cover that met their needs.
ASIC said this investigation identified similar concerns with the telemarketing of a range of other life insurance products sold by Aegon between 2010 and 2014.
ASIC deputy chair, Daniel Crennan QC, said: “ASIC is concerned that the way in which these products were sold was manifestly unfair, with customers given insufficient information to make an informed decision”.
The announcement noted that CommInsure would provide full refunds of premiums paid (plus interest) to consumers whose policies lapsed within six months, and partial refunds of a majority of premiums paid (plus interest) to consumers whose policies lapsed between six and 12 months.