ASIC takes TAL to court on RC charges

17 December 2019

The Australian Securities and Investments Commission (ASIC) has initiated action against major life insurer, TAL Life for alleged breaches of the Corporations Act and Insurance Contracts Act entailing its handling of income protection claims stemming from the Royal Commission.

ASIC said it would be alleging that a TAL investigation of a consumer’s medical history was based on false statements made by TAL in a Claims Pack sent to the consumer and would also be alleging that in sending a letter to the consumer, in which TAL avoided the insured’s policy, TAL avoided the policy without first offering the insured an opportunity address concerns and accused the consumer of breaching her duty of disclosure and her duty of utmost faith under the Insurance Contracts Act.

ASIC said it was seeking civil penalties in relation to the alleged breaches with the maximum penalty at the time of conduct being 10,000 penalty units of $1.7 million.

ASIC said the consumer first made a claim under her income protection policy in January 2014 after she was diagnosed with a medical condition but that after obtaining the consumer’s medical history, TAL sent a letter confirming that her policy would be avoided on the basis that she had failed to disclose some unrelated prior medical history.

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Big insurers denying claims for invalid reasons. No wonder people have lost interest in personal insurance.

Heaps more concealed misconduct by the big publicly listed insurers that has not as yet been exposed. They are caught in pursuing share value like addicts on cocaine. The Hayne commission of inquiry has only touched the surface. Adele Ferguson has only scratch the surface. So many policyholders and regulators naively thinking policy wordings can be relied on as to certainty. Not while the policy wording version change practices continue into the sunset pretending to be the same original policy, and while the big time insurer smiles "we are here to help" as it automatically deducts funds from policyholder bank accounts while using altered uncertain version terms and practices that even the regulator was fooled by.

Really Jeff? ASIC/APRA research shows 94% of all adviser led claims under retail policies are paid. Altering policy wordings to disadvantage policy holders? Not if they're guaranteed renewable retail products (Superfund cover is another matter!). I've rarely had trouble achieving a claim for a client and have seen instances where claims are paid even when by the letter of the policy they shouldn't have been. One for blatant non-disclosure of relevant medical information. Like other comments I believe ill-informed, and biased media pressure, is forcing insurers to pay unfounded claims. Result? Increased premiums. Your mention of Adele Ferguson does little to support your comments or credibility.

Watch out, big Jeff Morris is blowing his little whistle again to Adele.

Unfounded claim attempts are separate issues to an insurer denying to create a best climate to negotiate the claim down by 50% and then print publicly it paid all claims !

Then at outset underwriting and premium assessment per product type is modelled in advance to cover for the future liability risk. Hence a claim event makes no difference as to whether it should be abnormally assessed or not because the pool of policyholders and premium over time model has already taken the claim ratio into account. All the insurer is doing by seeking to deny or defer or decline or indeed defraud the claimant is to profit on the prior product model. Try to get a financial conditions report from any insurer on its product type and see how far you get. They produce loss-leaders and shenanigans designed to create enormous surplus reserves from the next generation of premium payers. Actuarial percentages set the premium vs risk based on the product. By altering T&Cs over time the insurer releases mega reserves so as to create free capital in order to buy yet another smaller insurer or a CBD tower again. Seems your opinion is very much the agency sales argument. Apart from fraudulent or false claims, there is every duty on the insurer to find a reason to pay no matter what as it has already assessed the claim risk when it issued the product based on the pool and big number theory. Which is why an insurer may even pay on a claim that does not exactly meet the policy terms. But next year new management will reverse that stance - watch and see.

I'm guessing TAL has paid this claim. ASIC are prosecuting to send message to insurers.

Not just this claim, but hundreds of other even more dubious claims. Insurers are far more concerned about avoiding the wrath of regulators and the media these days, than they are about being fair to all policy holders. When insurers are intimidated into paying lots of dodgy claims the only way to cover the extra costs is to increase premiums.

Yep the standard media line is Mary has a "claim" and the insurer denied her as if simply "claiming" is enough. My client had a "claim" but was denied - reason he was only off work three weeks not 4. That's the contract but not in the eyes of the media or even politicians.

Having read a lot about this claim I don’t understand how people get upset about this, if the client doesn’t tell the truth on their application and fails to disclose information which would have meant there was no insurance policy given then surely that’s their own fault. Why is the insurer to blame if they find out and decide not to pay the claim?

That's what the whole royal commission was about, create a huge media spectacle and make the insurers and advisers look bad. Forget facts, they're irrelevant. TAL will have paid this claim purely to get the media off their back.

Have you actually read the article? The ASIC allegations are about TAL doing the wrong thing - hence the possible $1.7 Mill fine.

Hey Gavin, I did read it, hence the comment. Did you follow the royal commission at all and the case that the article is referencing? If you don't disclose your medical history then it can come back to bite you, the fact that the condition being claimed for is unrelated to undisclosed pre-existing condition, is irrelevant.

There's no question TAL didn't handle the case well but there was wrongdoing on both sides.

I can answer this... It was over a mental health issue which wasn't ongoing and as well all know this should incur with it a mental health exclusion NOT a full decline of the policy. TAL were clearly trying to get out of a very big payout for the client. She had cancer, nothing to even do with mental health. She even disclosed on the tele-interview call that she had smoked marijuana at one point as well. She majorly over disclosed, to the point where she was concerned because she was a health practitioner and didn't want people to know she had tried marijuana in her 20's.

While I do use TAL as a provider and will continue to do so because I have had nothing but a good claims history with them, this is clearly an oversight by someone there and they were trying to keep there numbers positive and did it to the wrong person, a bad practice which I'm sure after this they won't do it again.

Sorry can I just add as well the TAL are one of the few providers who actually offer a mental health discount as well. So you can even reduce your premiums if they are applying a mental health exclusion. This really is the bad practice of the insurer in this case. You should all really go listen to the call she received from TAL, it would break your heart if it was your mother or father receiving that call.

Call an insurer and tell them you’ve had suicidal thoughts and ask for cover. The answer will be no.
Go back to another insurer and withhold that information, chances are you’ll get the policy.
Take that risk all you want but if assessors didn’t do the job of checking this stuff out then claims would balloon meaning healthy people like me foot the bill.
I’m sure they check on most claims and don’t tell anyone when they are doing it because it would cause undue stress and the majority of the time everything checks out.
Can only hope TAL digs their heels in and fights for their right to verify claims rather than rolling over like insurers always do.

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