- Freedom Insurance, savaged in the financial services royal commission for its sales tactics, has stopped selling insurance via direct telephone sales.
- It’s CEO Keith Cohen has been pushed out.
- And 140 staff will lose their jobs.
Freedom Insurance, criticised in the financial services royal commission for its direct telephone sales tactics, has forced out its CEO, shed 140 jobs and suspended direct sales of its risk life insurance.
The restructure follows moves by the corporate regulator ASIC to rein in direct sales of insurance to protect consumers from junk policies and high pressure tactics.
A year ago the company was looking to expanding via new products and potential acquisitions.
Today, CEO Keith Cohen has left the company he founded in late 2009.
Replacing him is Craig Orton, who joined Freedom in in February this year as Chief Operating Officer.
Orton represented the company at the royal commission where he apologised on behalf of Freedom for selling life and funeral insurance to a intellectually disabled man.
Freedom’s Chief Financial Officer, Jenny Andrews, is also leaving.
The company is cutting its staff to 90 from 230 and reducing costs by at least $15 million.
The restructure will cost about $4.8 million, including redundancy payments.
Freedom says the company won’t be generating up front commission revenue while its sales are suspended.
But it will continue to service its existing 350,000 customers, whose policies are unaffected by the changes, receiving administration fees and trailing commissions.
The net present value of commissions from polices was valued at $73.971 million at the end of June, partly offset by a provision for clawback of commissions of $16.338 million.
“Over the coming months, Freedom will continue to work constructively with its business partners to assess future options for its business model,” the company says.
Freedom in August reported a 14.3% increase in full year revenue to $61.34 million. Net profit after tax was $13.15 million, down 6.5%.
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