ASIC issues first stop order for life insurance products
ASIC has issued its interim stop order on two life insurance products from ClearView Life Assurance for DDO failures
ClearChoice Income Protection Cover and Accidental Income Protection Cover (Income Protection Cover) received the stop orders because of deficiencies in their target market determinations (TMD).
ASIC made the interim stop order in relation to Clearview Life’s Income Protection Cover to protect consumers from acquiring life insurance that may not be consistent with their objectives, financial situation or needs.
ASIC was concerned that the TMD failed to consider the impact of key eligibility criteria (i.e. age and minimum employment criteria) on the suitability of the product for certain classes of consumers.
As a result, ASIC was concerned that the target market contained classes of consumers for whom the product was not likely to be appropriate.
ASIC is also concerned that the TMD does not specify any meaningful distribution conditions to ensure that the Income Protection Cover would likely be distributed to consumers in the target market and likely exclude distribution to consumers in the negative target market.
The interim orders prohibit Clearview Life from engaging in retail product distribution and providing general advice in respect of the product for new customers. The orders are valid for 21 days unless revoked earlier.
ASIC said it is considering further stop orders for other insurance products and has released a review of the life insurance space and DDO.
To date, ASIC has issued 81 interim stop orders under DDO, including the stop order for Clearview Life. Of these, 74 interim stop orders have been lifted following actions taken by the entities to address ASIC’s concerns (including where 8 products were withdrawn). Seven stop orders remain in place.