CommInsure investigation a substantial piece of work: ASIC

The Australian Securities and Investments Commission (ASIC) will deliver findings on its investigation into CommInsure by the end of March, according to ASIC’s deputy chair Peter Kell.

Speaking at Money Management's Life Insurance Claims Handling breakfast today, Kell said it was a "substantial piece of work [by ASIC]," which examined 60,000 separate documents as part of the review. 

Kell said ASIC was also presently undertaking its 2017 life insurance industry review to specifically identify “systemic concerns or issues with the claims handling process”.

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As part of the review process, ASIC analysed 5,000 unique life insurance dispute records sourced from the Financial Ombudsman Service (FOS) and the Superannuation Complaints Tribunal (SCT), and incongruities in claims data for outcome rates.

Kell said while the 2016 report did not find any evidence of a broken system and that 90 per cent of the claims were paid in the first instance, there was nevertheless room for improvement.

Kell said there were concerns on the rate of declined claims as they varied considerably between organisations. The highest decline rates recorded were for total permanent disability (TPD) and trauma cover. 

"We also found that there were different experiences across different distribution channels," he said. "There were higher decline rates for life policies sold direct to consumer – that is, outside the advice channel – compared to policies sold through financial advisers or through the super channel."

Direct-to-consumer policies had an average 12 per cent decline rate against the eight and seven per cent rates for policies sold through advisers and superannuation channels, Kell said.

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So Kell found "There were higher decline rates for life policies sold direct to consumer – that is, outside the advice channel".

That didn't stop ASIC from trashing risk advisers back in 2014/2015, with able help from certain parts, and with the consequences still playing out.

So let's look at the consequences. You have 3 distribution channels. Retail, Group, Direct. If you trash one, the other 2 must pick up the slack or you end up with less insurance overall. Not rocket science.

So, which one will it be?
Less advice, more direct (with direct claim payout ratios 50% less than retail/advice)
Less advice, more group (hold on, isn't group experiencing losses, jacking up premiums, disengaged members, declining product quality in some areas, service issues with some super trustees when paying claims)
Less advisers, less insurance

Great result Kell. In the best interests of all Australians for sure. At least you got the truth out about direct, as late as it may be. APRA warned about direct back in 2012.

Meanwhile someone benefits? I wonder who that is. Not the adviser. Not the client. Who's left?

Do you really think Kell and the other numpties at ASIC care about the general public? Everyone knows that Kell and Medcraft are mere stooges of the Labor Party and Shorten, who in turn is the puppet of the Union masters. Why do you think everything that comes out of ASIC seems to be to the benefit of ISA?

That's right. With the adviser channel now well and truly undermined, Kell is turning his attention to direct insurance. When that channel also dries up, where will more consumers go? Union funds of course! Bill Shorten will be very pleased. Never mind that most of the 4 Corners examples were actually from union funds.

Astounding that he doesnt look into General Insurance policies sold... Sickness & accident policies are absolute junk. Do ASIC direct their resources to other areas players in the Finance Industry? or does it all go into Fin Planning?

I have been suffering severe depression and have now also got severe rheumatoid arthritis and unable to work in my occupation as a carpenter
I have cover in my super withbt super tpd but the decision has and is still going for the past five years and I am still getting
The run around and almost at the stage of losing my home and property
I'm am qui
Annoyed at the system and also t
The bank that sold me the insurance
Can anyone help me and my family

Hi Angelo, if its been going for 5 years there must be a issue somewhere along the line, see a planner that offers hourly rates for this type of work , just ask about there are many out there to help, a few hours spent on this will give a professional planner a good idea of whats going on with the claim and give you some guidance. Then you can decide what to do from there. I hope your health is ok at the moment and that you get through this tough time.

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