Life insurers brace for tough new rules

EXECUTIVES in the $34 billion life-insurance sector would face the same tough regulations the Government foisted on badly behaved bankers under wideranging proposals unveiled after a parliamentary inquiry.

Life insurers will be bracing for reforms after the parlia- mentary joint committee on corporations and financial services made several unanimous recommendations.

The 18-month probe of the scandal-ridden sector found bonuses and “hidden payments” led to bad advice and poorly sold policies.

Recommendations include removing the industry’s exemption from parts of con- sumer law, giving regulators greater powers, and the launch of a series of watchdog investigations into behaviour.

“There are sections of the industry that can and must do better in delivering the protection they promise while remaining financially viable long into the future,” committee chairman Liberal MP Steve Irons said.

Its recommendations were made without a dissenting report by deputy chair, Labor senator Deborah O’Neill.

They are likely to heap pressure on Financial Services Minister Kelly O’Dwyer and Treasurer Scott Morrison to adopt at least some of the proposals in the May Budget.

The inquiry was launched in the wake of revelations the Commonwealth Bank’s life insurance business CommInsure was using outdated definitions of heart attack to reject claims.

The committee has found widespread use of problematic remuneration in the industry, anti-competitive sales practices, weak consumer protections and troublesome behaviour around genetic testing and customer medical records.