CommInsure has come under fire at the Banking Royal Commission today for misleading and deceptive advertising of its insurance policies, with Commissioner Kenneth Hayne QC also suggesting that its reprimand for this misconduct by the Australian Securities and Investments Commission (ASIC) was little more than a slap on the wrist.
CommInsure managing director, Helen Troup, today admitted from the stand that advertisements the insurer ran on its website and in pamphlets were misleading in terms of communication of the limitations placed upon the coverage offered.
This was the first time CommInsure had admitted publicly or to regulators that this advertising was concerning, despite ASIC running an investigation into the matter.
Troup claimed that the firm had “elements of defence” for its actions, however, citing the context of the advertising as part of a broader website and an expectation that consumers would understand that an insurance policy would be subject to terms.
Despite Hayne pointing out that “the chain of reasoning for an ordinary consumer would be, ‘if the doctor tells me I’ve had a heart attack, I’ve had a heart attack’”, Troup maintained that consumers would expect insurers to impose a set definition of heart attacks.
An agreement with ASIC following this conduct saw the insurer voluntarily pay $300,000 to a community benefit fund, which Troup said it felt was a form of punishment for its actions despite Senior Counsel assisting the Commission, Rowena Orr QC, describing it as “a very good outcome” for the firm.
Hayne characterised the payment as “a very small amount”, saying it was really only three times the payout CommInsure would have to make were a heart attack claim successful. As he and Orr pointed out, had each ad counted for a singular contravention under the Corporations Act (and they arguably could have counted for multiple), CommInsure’s penalty could have hit $8 million.
Yet, when asked by the Commissioner if “at the end of the day, did CommInsure come out of this process thinking it had been punished or brought to book,” Troup insisted that it had.