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Jul 2020

Australia: Inquiry tables life insurance policy questions

Source: Asia Insurance Review | Nov 2018

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has exposed systemic issues in the life insurance market and its code of practice. The commission’s interim report released late in September questions the adequacy of the current regulatory regime to protect consumers from detriment.
The questions also cover a range of topics including product design, disclosure, sales, claims handling, insurance in superannuation, scope of the Insurance Contracts Act, regulation, and compliance and breach reporting.
For instance, the inquiry asked whether direct sale of insurance via outbound telephone calls should be banned. It also asked whether life insurers should be prevented from denying claims based on the existence of a pre-existing condition that is unrelated to the condition forming the basis for the claim.
The report also questions whether there should be minimum standards for life and total permanent disability insurance obtained under group insurance policies.
It asks too whether the terms set out in the Insurance in Superannuation Voluntary Code of Practice is sufficient to protect the interests of fund members.
The inquiry is calling for arguments justifying insurers’ exclusions from laws requiring fair contracts, following revelations some insurers relied on unfair terms and conditions, such as outdated technical medical definitions, to avoid payouts. Insurers though are required to act in good faith and must otherwise obey company, insurance and contract laws.
The commission will hold a final hearing in November that will focus on policy questions arising from the first six rounds that took place from March to September. The commission’s final report is due next February. A 
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