ASIC finds no breaches
Insurer cleared but practices outdated
THE Commonwealth Bank’s insurance arm was “clearly out of step with community expectations” in using outdated medical definitions for heart attacks and severe rheumatoid arthritis, the corporate watchdog says.
But CommInsure was not acting illegally when it used the outdated definitions, according to the Australian Securities and Investments Commission. And there is also “no evidence” CommInsure heavied doctors to change medical opinions, nor that documents had been altered or removed with the aim of manipulating claim outcomes, the commission says.
Releasing the results of its investigation into CommInsure yesterday, ASIC commissioner Peter Kell said the life insurance industry nonetheless needed to “lift its game”.
“It is an industry in catch-up mode, to be honest,” he said.
“Some of the practices, some of the products have not kept pace with consumer expectations.”
The year-long ASIC investigation was sparked by claims made by the insurer’s former chief medical officer Benjamin Koh. ASIC reviewed 60,000 documents and interviewed 10 doctors, including Dr Koh.
The regulator yesterday said there was no evidence to support allegations of lawbreaking by CommInsure, including its former use of outdated medical terminology.
“ASIC found that there is no legal basis for us to take enforcement action in relation to this concern,” the report said. “This is because the law allows the insurer to set out the cover its policy provides and to define what it means by various terms including medical terms.
“Although this is not against the law, it is clearly out of step with community expectations, given that consumers cannot be expected to know whether a medical definition is already outdated when they purchase life insurance.”
Life insurers have since pledged to update the industry code of conduct to review medical definitions more frequently. CommInsure had previously agreed to apply an updated heart attack definition for cases dating back to May 2014. It is now extending that back to October 2012.
It has so far paid $2.5 million to 17 customers based on the changed definition.