Misconduct in the life insurance and superannuation industries have been under the microscope at the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The sixth round of hearings have been opened.
Life insurance industry misconduct
AIA Australia has acknowledged that it engaged in misconduct at various points by not providing notices to up to 100,000 customers, who may have been unaware that insurance had been cancelled. The life insurer also charged customers more than once for the same premium, due to a system error.
AMP was singled out for insurance rewriting, with an adviser recommending a change in insurance policies, with the adviser collecting another commission payment.
Over the five-year period the Commission enquired about, advisers and financial advisory groups were paid over $6 billion in commissions.
CommInsure has admitted to misleading the Financial Ombudsman Service (FOS) by deliberately withholding medical information and causing delays in a claims case.
Accidental death policies also came under fire.
Colonial Mutual Life Assurance (CMLA, CBA) denying 88 per cent of 1,829 claims, but receiving $121 million in premiums
MLC denied 61 per cent of 103 claims, receiving $34.2 million in premiums
OnePath denied 14 per cent of 435 claims, receiving $57.6 million in premiums
Suncorp denied 40 per cent of 10 claims, and received $3.9 million in premiums
Westpac Life denied 49 per cent of the 108 claims made, and received $104 million in premiums
Freedom Insurance was grilled over selling life insurance to an intellectually disabled man, withdrawing the cover only after repeated communications from his family.
The Royal Commission will not be examining life insurance advice.
Superannuation provider misconduct
Some retail superannuation funds have been accused of delaying transitioning members into cheaper MySuper products, from more expensive legacy funds. Industry funds, by comparison, have been let off the hook for the most part. Hostplus has been accused of possibly misleading communications with low-balance members, while former Catholic Super senior staffer Rob Clancy did not disclose conflicts of interest, with his brother the managing director of Australian Family and confidential information shared between them.