- Freedom insurance sold a policy to a man with an intellectual disability.
- The man’s father, a Baptist minister, spent two years trying to get a copy of a recording of the company selling his son the policy.
- The Down Syndrome man was sold an insurance package, including accidental death and funeral expenses cover.
Freedom Insurance sold a life policy package including funeral expenses coverage to a 26-year-old man with Down Syndrome who didn’t understand what was happening and found it difficult to express himself, the financial services royal commission was told today.
Giving evidence today was Grant Stewart, a Baptist minister, who detailed the selling practices of Freedom as it related to his son, who has an intellectual disability.
Rowena Orr, senior counsel assisting the commission, played recordings of phone calls from Freedom which showed the son didn’t understand what was being asked of him.
At one stage the sales person asks: “Is your mother at home?”
The son said she wasn’t.
“Do you think ten thousand would be enough (cover) for you?”
The son: “I don’t mind.”
“Do you think ten would be enough to leave behind for them (family)?”
The son: “Yes.”
The cover cost $6.56 a fortnight. The sales person gathered debit card details.
His father then later called to cancel the policy.
His son had to say the words: “I wish to terminate the policy.” From the recording, he found it difficult to say the words, stuttering and needing prompting to finish the short sentence.
Stewart also cancelled his son’s debit card because he wasn’t confident the insurance company wouldn’t take money from the account.
Stewart also emailed Freedom with an official complaint: “He (the son) does not possess the capacity to discern and indeed to make informed decisions about such things as his ‘need’ for life insurance … taking advantage of a person with an obvious intellectual disability for the purposes of luring them into buying one of your policies cannot be condoned.”
Here’s a transcript of part of a sales call:
Stewart then spent two years trying to get a copy of the recording of the sales calls to his son.
He eventually got a letter from Craig Orton, Freedom’s Chief Operating Officer, with the call recordings.
Orton said the sales person had been “exited from the business” shortly after the sale.
He said the call did not “reflect the culture and behavioural standards” of Freedom.
Today at the hearing, Orton was questioned and later publicly apologised:
“Mr Stewart, to your and your son, I sincerely apologise for that your son had to be put through that, and you have that from the bottom of my heart. It should not have occurred.”
Orton told the commission that Freedom decided to stop selling accidental death insurance on outbound calls.
Freedom last month reported a 14.3% increase in full year revenue to $61.34 million. Net profit after tax was $13.15 million, down 6.5%.
Last week the company announced a strategic review following a report by corporate regulator ASIC on direct life insurance.
ASIC says it intends to restrict outbound sales of life and funeral insurance in order to protect consumers.
The investigation by the corporate regulator found that sales of accidental death insurance were problematic, including where consumers were downgraded to accidental death insurance after being rejected for comprehensive life insurance. Accidental death insurance only covers death due to some types of accidents.
Freedom says a significant proportion of its upfront commission revenue is derived from the sale of funeral insurance, a direct sales team.
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