Life/risk churn raised at Royal Commission
Life/risk churn has raised its ugly head at the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The Royal Commission has been told that AMP Limited had acknowledged possible misconduct with respect to “insurance re-writing” between 2010 and 2014 entailing authorised representatives (ARs ) recommending replacing policies to extract maximum up-front commissions.
The question of churn and AMP was raised by counsel assisting the Royal Commission, Rowen Orr QC, in her preliminary outline of the matters would be traversed during the sixth round of hearings.
Orr also told the Royal Commission of instances of possible misconduct acknowledged by AIA Australia Limited, including the double-charging of premiums.
As expected, Orr also signalled that the Royal Commission would also be traversing ClearView’s direct insurance business and the $1.5 million remediation exercise currently underway
The Royal Commission also heard about the claims-handling issues which had surrounded CommInsure, while MetLife also acknowledged issues it had experience with the Financial Ombudsman Service with respect to claims-handling.
MLC Life also acknowledged 245 legal proceedings being brought against it over total and permanent disability (TPD) claims being brought against it.
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The Federal Court has dismissed a conflicted remuneration case brought by ASIC against the director of life insurance distributor Freedom Group, where Bali holidays and Vespa purchases were among sales incentives.
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.
