ASIC releases CommInsure report
The Australian Securities and Investments Commission (ASIC) has identified a range of areas where CommInsure needs to make improvements to its claims handling processes, similar to areas identified in a Deloitte report in their independent review of the firm’s claim handling.
In its report on its investigation into CommInsure and its claims handling process, ASIC said areas which required improvement included better and timelier communications with consumers and more training and assistance for claims managers.
“ASIC will work with CommInsure to make sure these improvements are implemented as quickly as possible,” it said.
ASIC said it had also requested CommInsure to carry out a further implementation review by an independent expert in mid-2018 to test the effectiveness of the changes.
CommInsure must also provide assurance it was making the required improvements to its business, to which it has agreed.
ASIC also said CommInsure’s trauma policies with medical definitions were out of date with current medical practice, particularly for heart attack and severe rheumatoid arthritis, but said this was not against the law.
“This is because the law allows an insurer to set out the level of cover its policy provides, including out of date medical definitions as long as these are clearly disclosed in the policy,” ASIC said.
Consumers could end up with insurance policies with out of date medical definitions when insurers sell consumers policies which already have outdated medical definitions.
“Although this is not against the law, it is clearly out of step with community expectations, given that consumers cannot be expected to know whether a medical definition is already outdated when they purchase life insurance,” ASIC said.
Also, as life insurance is a long-term product, polices could become out of date over time but it is not easy to update a policy or change its terms because life insurers were legally required to maintain a consumer’s cover and cannot update a policy easily.
“While this is an important consumer protection, it creates a 'legacy products' issue in the life insurance industry. The Government is considering this industry-wide issue further in response to a recommendation of the Financial System Inquiry,” ASIC said.
It acknowledged CommInsure had since updated its medical definitions including for heart attack and severe rheumatoid arthritis, while its updated heart attack definition would apply back to May 2014. But in response to ASIC’s concerns, CommInsure said it would update its heart attack definition back to October 2012 in line with global cardiology bodies that published updated consensus on the appropriate clinical marker for heart attack.
ASIC said it found no evidence to support allegations that CommInsure claims managers applied undue pressure on doctors to change or modify their medical opinions.
The investigation was based on 60,000 documents including emails, and interviews with individuals including customer representatives including financial and legal advisers, reviewed client files from CommInsure, the Financial Ombudsman Service (FOS) and the Superannuation Complaints Tribunal (SCT), and extensive engagement with the Australian Prudential Regulation Authority (APRA).
Recommended for you
Policy and advocacy specialist Benjamin Marshan has left the Council of Australian Life Insurers after less than a year, having joined in March from the Financial Planning Association of Australia.
The declining volume of risk advisers meant KPMG has found a rising lapse rate for insurance policies arranged by independent financial advisers, particularly in the TPD and death cover space.
The Life Insurance Code of Practice has transferred from the Financial Services Council to the Council of Australian Life Insurers.
The firm has announced it will no longer be writing new life insurance policies in the retail advised and corporate group insurance channels, citing a declining market and risk adviser numbers.
