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RC finds TAL went on “fishing expeditions” to protect bottom line

Life insurer TAL has acknowledged that it used invasive investigation methods for the purpose of avoiding the approval of income protection policies on the basis of non-disclosure in today’s hearing of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

Loraine van Eeden, general manager, claims at TAL Group, admitted on behalf of the insurer that at least in 2012 and 2013, it undertook investigative practices into claimants’ backgrounds that far exceeded what was relevant or necessary to avoid income protection claims.

“They extended well beyond anything relevant to the claimed condition, to all sorts of irrelevant medical conditions for the purpose of whether or not the policy could be avoided on the basis of non-disclosure,” said senior counsel assisting the Commission, Rowena Orr.

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The Commission heard a case study of an unnamed claimant who sought an income protection claim and whose claim was investigated despite no inconsistencies or “red flags”.

Senior counsel assisting looked at the Insurance Contract Act, which provided that where inconsistencies or red flags in a claimant’s application were identified, the case manager was required to gather medical and financial information to ensure a complete history was obtained.

The Act also said that where no inconsistencies or red flags were identified, a general disclosure review could be deemed necessary by the case manager, and where the sum of the claim was large, a thorough review was to be undertaken before assessment or before admitting the claim.

“So, the guiding principal in relation to when case managers should embark on a general review was TAL’s bottom line,” said Orr.

The insured’s financial history was similarly looked into despite the claim being admitted, and when van Eeden was asked whether there was a need for an investigation to justify whether the insured could validate the level of benefit applied for, she was unable to answer.

When the insured applied for a second claim as she now suffered from mental illness, TAL cancelled the policy immediately with no communication despite strong medical evidence and referred the matter to their internal dispute resolution (IDR) team.

The Royal Commission heard the IDR team failed to make a thorough, independent review, and instead provided a letter with no evidence of re-assessment.

In response to this, van Eeden said it was not appropriate, and “cancelling the policy immediately without any additional communication is also not the way we [TAL] should be doing business”.

Following a hearing by the Financial Ombudsman Service to ensure TAL reinstated the policy and pay the claim amount with interest, the case manager engaged the services of a private investigator to investigate the insured, to which Orr put to the witness that this was in fact to "stop paying the claimant her benefits". 

 




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