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The CBA now faces new investigations over its insurance arm

Getty/ AFP

The Commonwealth Bank is fighting new claims of unethical and unscrupulous behaviour, this time in its life insurance business, CommInsure, as Australia’s biggest bank is still trying to repair the damage caused by its financial planning division.

CommInsure has been accused of delaying payouts in the hope that policyholders will die before a claim is settled.

The astonishing claims of the tactics used by CommInsure in order to deny claims from sick and dying policyholders have some MPs calling for a royal commission into the new scandal for the bank just two years after it faced a Senate inquiry into the actions of its financial planners.

The bank looks set to face a new Senate inquiry as well as fresh investigations by the corporate regulator, ASIC.

Assistant treasurer Kelly O’Dwyer told the ABC’s AM program that the allegations were “deeply shocking and deeply concerning”.

“There will be a Senate inquiry,” O’Dwyer said.

“We need to look at whether this is systemic and wider than CommInsure and ASIC will be looking at this too.

“We need to get to the bottom of the facts.”

Labor’s financial services minister spokesperson, Jim Chalmers, said the government should look at holding a royal commission into the issue.

Commonwealth Bank CEO Ian Narev spoke to ABC TV’s “Four Corners”, arguing that in the wake of the financial planning scandal, the bank has focused on improving its ethics. He said the allegations against CommInsure did not fit with the bank’s approach and apologised to the policyholders, saying he would meet personally with them to hear their stories.

He said the responses to claims “has not been good enough”.

“Four Corners” detailed allegations by CommInsure’s former chief medical officer, Dr Benjamin Koh, that insurers pressured doctors to change medical opinions in order to deny payouts, that medical files went missing and outdated medical definitions were used to deny claims.

Dr Koh said he repeatedly tried to raise his concerns with senior managers at CommInsure, and even went to the insurer’s board, but he was dismissed in August 2015, after less than two years in the role, for breaching the company’s IT policy by emailing records to a personal account.

Koh said he did it because files were going missing and he’d tried repeatedly and unsuccessfully to have the matter investigated before taking it to the board.

He told journalist Adele Ferguson that legitimate claims were denied in a systematic fashion in order to boost CommInsure’s profitability, including pressuring doctors to change their reports.

“They were quite blatant about it … ‘can you please change it or delete it so that we can go to someone else to provide another opinion that’s more favourable’,” Koh told “Four Corners”.

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.

Matthew Attwater was an award-winning CBA customer services representative, but was “medically retired” suffering from PTSD after the bank received a psychiatric report that said he was not fit for work.

After he lodged a claim for total and permanent disability, CommInsure denied the claim arguing the same report showed he was still able to work.

The claim was denied for three years and only settled after “Four Corners” interviewed Attwater for its story.

The Four Corners-Fairfax investigation appears to have sparked a number of settlement offers on CommInsure cases that have been running for up to four years.

BeyondBlue chairman Jeff Kennett said the CBA had “a great deal to answer for” over its behaviour.

“For the Commonwealth Bank … to be doing this sort of thing to one of their own employees is disgraceful. Why do they get away with it? Because they’re big,” he said.

The bank’s CEO, Ian Narev, admitted “we have got a long way to go on mental illness” after being told of Kennett’s comments.

Another former CBA employee with multiple sclerosis, Helen Polydoropoulos, has been fighting for a payout for four years after she was “ill-health retired” based on the advice of the bank’s chief medical adviser, Dr Colin Johnston.

Johnston also signed the rejection letter from CommInsure, which argued she was fit for work. The delays have seen her struggle financially and at one stage left her homeless.

CommInsure has offered to settle in the wake of the “Four Corners” story.

In another instance, James Kessel, who had a heart attack in September 2014 and was resuscitated in hospital after his heart stopped beating, was denied a $1.1 million payout because the insurer used a 20-year-old and outdated benchmark to define whether the heart attack was serious.

They offered him $25,000 instead.

But Professor Andrew MacIsaac, president of the Cardiology Society of Australia and New Zealand told “Four Corners” that the severity of a heart attack cannot be measured by simply looking at the benchmark CommInsure used – the level of a protein called Tropinon in the blood.

“Four Corners” obtained internal documents from a CommInsure committee meeting discussing Kessel’s case, which suggest the insurance company was not acting in “utmost good faith” by denying the claim, putting it in breach of its legal obligations.

“We believe that by declining this claim based on a now unobtainable threshold, CommInsure would not be acting in utmost good faith,” the report says.

In another case highlighted by “Four Corners”, a 37-year-old man diagnosed with terminal leukaemia and given 12 months to live, had his claim repeatedly rejected as the insurer kept sending him for more blood tests, but was offered a settlement last week as his story was about to air on the program.

Addressing the allegations against CommInsure, Narev said they were “completely inconsistent with the culture we are building at the Commonwealth Bank”.

His apology comes two years after he issued a public apology for the actions of the bank’s financial planning division, which stood accused of forgery and cover-up.

Narev said the measures CommInsure used to define a severe heart attack were being updated.

The update comes after Koh wrote a review of heart attack insurance definitions during his time at CommInsure. He conducted a random audit of 40 claims and found that based the old definitions, more than 50% of legitimate claims could be “arbitrarily disadvantaged” and knocked back.

After being told about the Polydoropoulos case, Narev said “that is an unacceptable outcome for a customer and we’ll put it right”.

You can watch the full “Four Corners” story here.

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