ASIC clears CommInsure but tells it to lift its game

THE corporate watchdog has cleared CommInsure of allegations its managers pressured doctors to alter medical opinions so it could deny life insurance claims but says some practices were “out of step with community expectations”.

A near year-long investigation by the Australian Securities and Investments Com- mission found no evidence to support allegations by CommInsure’s former chief medical officer that doctors were pressured, or that documents had been altered or removed with the aim of manipulating claim outcomes.

However ASIC said it had identified areas in which the Commonwealth Bank-owned insurer needed to improve and said it is looking at whether advertising promoting heart attack cover misled consumers.

ASIC said CommInsure had relied on outdated medical definitions when assessing claims related to heart attacks and to severe rheumatoid arthritis.

“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with community expectations, given that consumers cannot be expected to know whether a medical definition is already outdated when they purchase life insurance,” ASIC said in a statement.

A life insurance industry code of conduct, starting from July 1, will require insurers to review medical definitions at least every three years.

“The life insurance industry as a whole needs to lift its game,” ASIC deputy commissioner Peter Kell said.

CommInsure had already agreed to apply an updated heart attack definition back to May 2014 and is now extending that to October 2012.

It has paid a total of $2.5 million to 17 customers, based on the changed definition and will work to identify others.

Commonwealth Bank chief executive Ian Narev previously said he was “disappointed by the handling” of some cases.

The regulator said it will work with CommInsure to improve its communication and training.