AMP charged non-smokers a smokers’ premium

AMP Limited charged a non-smoker $72,000 worth of premiums designed to be for smokers under a system that required non-smokers to submit a declaration identifying themselves as such to the insurer to stop themselves being charged a premium imposed on smokers.

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services industry today heard that AMP’s default position on its insurance products was to presume customers were smokers unless otherwise stated.

In the stand, AMP group executive, wealth solutions and customer, Paul Sainsbury, said that unless a person was underwritten, AMP would only know they were not a smoker, and therefore eligible to be on the insurer’s pricing scheme for non-smokers, if they expressly told the firm they were.

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Furthermore, Senior Counsel assisting the Commission, Mark Costello, tabled evidence showing that in at least one case, the company had failed to give a customer sufficient information that they needed to submit such a declaration.

The issue occurred when the customer was moved from an employer AMP super plan to a general AMP super plan, with the person not being sufficiently informed that he must declare himself as a non-smoker to avoid additional life insurance premiums.

The customer in question filed a complaint with the Superannuation Complaints Tribunal to try and recover the premiums he had paid for being classified as a smoker when he wasn’t for over eight years.

While Sainsbury did not agree with Costello that it was misleading of AMP to require a declaration to receive the non-smoker rate, he did acknowledge that the policy was “difficult to understand if you were a member”.

“It’s not very member-centric to say we sent you a letter eight years ago and we’ve charged you a higher premium every year since then without telling you again, it it?” Costello said, talking on how the trustee had not notified the member he was being charged a smoker’s premium.

 “It could be better,” Sainsbury responded, suggesting that different standards of member treatment by those in the industry existed now.




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