The financial services royal commission has turned its attention to life insurance, pressure selling, the delaying of payouts on claims, the rejection of claims for disability, and the question of whether many expensive policies offer much of a benefit.
Running the interrogation of witnesses about misconduct by insurance companies is senior counsel assisting the commission, Rowena Orr.
Orr, in opening the hearing today, gave a rundown of written responses to the commission by a long list of Australian insurers, most admitting misconduct or conduct falling below community standards and expectations.
She gave the example of AIA Insurance which had admitted to the commission in writing that it had overcharged customers by as much as double the normal fees to a combined total of $775,000.
Orr says another insurer, Allianz, told the commission it had identified 49 instances of misconduct, including overcharging when customers reduced their cover. More than $650,000 was reimbursed.
Insurance giant AMP had acknowledged it had engaged in “possible” conduct which may have fallen below community standards, says Orr.
The Commonwealth Bank told the commission it had identified 60 areas of misconduct, including trauma policies. About 65,000 were refunded $10 million.
The only witness due today is Gregory Martin, chief risk officer for life insurer ClearView.
This insurance company has already been the subject of the royal commission’s attention because of the questionable sale of policies to indigenous Australians.
Corporate regulator ASIC has found that ClearView used “unfair and high pressure sales practices” when selling life insurance policies by phone.
ClearView then agreed to refund $1.5 million to 16,000 people after ASIC found the insurance company made misleading statements about the cover, the premiums, and the effect on pre-existing medical conditions.
The sixth round of public hearings is looking at issues associated with the sale and design of life insurance and general insurance products, the handling of claims under life insurance and general insurance policies, and the administration of life insurance by superannuation trustees.
The hearings will also consider the appropriateness of the current regulatory regime for the insurance industry.
Listed to be examined in round six of hearings by the royal commission are witnesses from AMP, CommInsure, Suncorp, Allianz, IAG and Youi.
The royal commission is due to make an interim report by the end of this month on its investigations of misconduct by banks, wealth managers, superannuation funds and insurers.
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