The Commonwealth Bank and its life insurance offshoot, CommInsure, has just released a statement following a devastating expose on Monday night’s Four Corners program that accused the insurer of unethical and unscrupulous behaviour in the way it dealt with some policyholders.
Claims that CommInsure acted in a potentially illegal fashion to deny claims from sick and dying policyholders will now be subject to a Senate inquiry, with some MPs pushing for the bank to face a royal commission, especially since the latest scandal comes in the wake of a Senate investigation into the bank’s financial planning division, which stood accused of forgery and cover-up and led to CEO Ian Narev apologising for CBA’s actions and promising to improve ethics in the organisation.
ASIC is also investigating CommInsure over issues raised on Monday night, including the company’s former chief medical officer, Dr Benjamin Koh, alleging insurers pressured doctors to change medical opinions in order to deny payouts, that medical files went missing and outdated medical definitions were used to deny claims.
The program looked at four cases, including two instances where medical opinions were used by the CBA to dismiss staff on medical grounds, but when they lodged claims for ill health, CommInsure used the same reports to deny the payouts. In one instance, the bank’s chief doctor signed the reports used to both dismiss the employee and deny the claim.
Narev was interviewed by Four Corners and apologised to the policyholders, saying he would meet personally with them to hear their stories.
This afternoon said he was concerned about the customers in the Four Corners report and welcomed the CommInsure response, with the insurer’s board signing off on a number of measures to improve its claim response and product disclosures.
The bank says the CommInsure board will appoint an independent expert to oversee a claim review program focused on declined claims, with particular emphasis on customer advocacy.
“The independent expert will also be specifically asked to form a view on whether the circumstances surrounding the review of any particular claim warrants further action,” the bank said. “Ethical concerns that have been aired in recent media reports will be independently investigated.”
The insurer also plans to introduce an additional review layer its claims assessment, with a panel that includes the managing director and at least two independent industry experts reviewing complex claims CommInsure plans to decline. A board sub-committee will also monitor the panel outcomes
CommInsure chairman Geoff Austin said in the statement that he apologised on behalf of the company to the affected customers.
“The concerns raised in the recent cases reported are not a reflection of the values of our people or our business,” he said.
“We expect the highest ethical standards of all our employees and will continue to ensure that the policies and processes within the business support these standards.”
One of the cases highlighted by Four Corners was a man who had to be revived by a defibrillator after his heart stopped beating following a heart attack. CommInsure used an outdated measure to deny his $1.1 million claim, saying his heart attack was not serious enough, and offered him $25,000 instead.
Internal company documents obtained by the program revealed Kessel’s case was discussed at a committee meeting and said “declining this claim based on a now unobtainable threshold” meant CommInsure was not acting in “utmost good faith”, putting it in breach of its legal obligations.
Today Austin said CommInsure has accelerated a planned upgrade of its heart attack and severe rheumatoid arthritis definitions in its Trauma product. The update will be completed by the end of the month and backdated to May 2014.
“CommInsure has also committed to a more regular review of the life insurance offering to ensure definitions reflect evolving medical standards and practices,” the CBA statement said.
The bank said assertions that CommInsure was not responsive to internal concerns raised were incorrect.
“The CommInsure Board commissioned an independent review and other enquiries were made. CommInsure has taken a range of actions, including benchmarking of product features, targeted review of customer claims, governance changes to enhance structural independence and additional training for claims staff, including customer empathy and professional protocols,” the statement said.