The Australian Securities and Investments Commission (ASIC) is investigating claims handling by the Commonwealth Bank’s life insurance business, following media reports that the insurer had a culture of avoiding payouts to sick and dying policyholders, Fairfax Media reported.
The regulator will also investigate the product design of policies and consumer remediation at CommInsure, which is the insurance arm of Commonwealth Bank, one of the country’s largest banks. If legal breaches are found, individuals and the life insurer will be penalised.
ASIC’s probe followed a six-month ABC-Fairfax media investigation into CommInsure’s practices. Whistleblower Comminsure’s former chief medical officer, Dr Benjamin Koh, revealed that doctors were pressured to change their opinions, outdated medical definitions were used to deny payouts, and medical files disappeared from the internal filing system.
“Focused too much on process rather than people”
Responding to the allegations, the CEO of Commonwealth Bank, Mr Ian Narev, admitted that the bank failed to meet its responsibility to some life insurance customers.
He said in a statement: “In these cases we focused too much on process rather than people. By their nature, life insurance policies can be complex. Claims processes involve the review and assessment of detailed documentation. Whilst thoroughness is important for the integrity of the system, this must be balanced by customer need and dignity.
“Among more than four million CommInsure customers, there may be other cases similar to these. However, the evidence shows that in the vast majority of cases, the right outcomes for customers are reached in the right way.”
He said that Comminsure had planned an update of medical definitions for later this year and the task “has now been accelerated to be completed as soon as possible”.
The scandal has roiled the industry. National Australia Bank, which recently sold 80% of its life insurance business to Nippon Life, will set up a formal process to review past denied claims practices going back to 1 January 2014, with a focus on critical illness. Australia and New Zealand Banking Group has begun a review of life insurance declines.