CommInsure in the clear on claims but ‘ out of step’

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 “clearly out of step with community expectations”.

A near year- long investigation by the Australian Securities and Investments Commission 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 yesterday it had identified areas in which the Commonwealth Bank- owned insurer needed to improve and said it was still looking at whether advertising promoting heart attack cover misled consumers.

ASIC said CommInsure, unlike most of its peers, had relied on outdated medical definitions when assessing claims related to heart attacks and to severe rheumatoid arthritis.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with community expectations, given that consumers cannot be expected to know whether a medical definition is already outdated when they purchase life insurance,” ASIC said in a statement.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, announced in October and which comes into force on July 1, will require insurers to review medical definitions for current products 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 back to October 2012.

It has so far paid a total $ 2.5 million to 17 customers, based on the changed definition and will work to identify other cases.