An inquiry into Australia's financial sector yesterday heard examples of possible misconduct by insurance companies, including spying on policyholders, overcharging customers and misleading sales calls, reports Reuters.
The Royal Commission opened two weeks of hearings into the insurance industry yesterday after earlier this year exposing cases of misconduct in the consumer credit, financial planning, and small business lending sectors.
The inquiry has the power to recommend prosecutions and instigate sweeping reforms of the financial system, threatening to upend business practices at some of the country’s biggest financial institutions.
The inquiry will examine 10 case studies over the coming days, including incidents of overcharging customers, poor product disclosure and inadequate handling of insurance claims, said Ms Rowena Orr, a lawyer assisting the inquiry.
In her remarks to the inquiry, Ms Orr disclosed several admissions of possible misconduct that were included in submissions sent by 16 domestic and foreign insurance companies.
TAL, the Australian unit of Japanese insurance giant Dai-ichi Life Holdings, said in a submission that it had made hundreds of misleading sales calls, she said.
“From 2012 to 2017, TAL identified that approximately 3.5% of its monitored calls were misleading sales calls according to its internal criteria,” she told the inquiry.
These included calls to vulnerable people with limited literacy, or poor communication and comprehension skills, the inquiry heard.
American insurer Metlife said in its submission to the inquiry that it had spied on policyholders who had made claims for mental health conditions, Ms Orr said, without giving details.
Hong Kong-based AIA Group said it had overcharged customers on their premiums, while the Swiss giant Zurich Insurance Group reported cases in which it had applied the terms of its policies incorrectly.
Insurance Australia Group, which holds a nearly 20% share of the country’s life insurance market according to IBIS World, told the inquiry it had identified 112 instances of misconduct, including systemic problems with its sale processes and the handling of claims, Ms Orr said.
She said reports of misconduct were also received from the insurance units of Commonwealth Bank, Westpac Banking Corp, National Australia Bank, and Australia and New Zealand Banking Group.
QBE Insurance, which holds about 8.7% of the life insurance market, was the only firm that did not report instances of misconduct to the inquiry, Ms Orr said, adding that QBE described some “issues” and “incidents”.
Before the public hearings, companies are asked to identify in their submissions any misconduct they had engaged in, or any conduct that fell below community standards and expectations since 2008.
This week, the royal commission will investigate life insurance; next week it will investigate general insurance such as add-on insurance sold through travel insurance, car dealerships and natural disaster claims.