Wednesday, 23 January 2019
BREAKING NEWS

AMP digs in over charging dead people life insurance premiums

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Counsel assisting the royal commission, Rowena Orr, QC, recommended that AMP had committed a criminal offence when the company failed to report it had charged insurance premiums to dead people to the Australian Securities and Investments Commission within the legal timeframe.

Ms Orr also said AMP’s conduct could have breached its obligations to act efficiently, honestly and fairly and also amounted to conduct below community standards.

AMP rejected those findings.

“These findings are also not open on the evidence. AMP strenuously objects to the proposed open findings and submits that the propositions put forward by counsel assisting are not available.”

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AMP maintains its decision to charge the premiums was not unlawful and thus did not require it to report it as a significant breach to ASIC. AMP self-reported that it failed to refund $1.3 million to more than 4,000 life insurance customers who had not been refunded the premiums charged after their death.

CommInsure, which CBA sold to AIA last year, was grilled at the royal commission over its use of out of date definitions for heart attacks and cancer to refuse life insurance claims.

This included refusing an insurance claim for breast cancer because the claimant did not have enough of her breasts removed in surgery as per a 20-year-old definition that had not kept up with current medical standards to retain as much healthy tissue as possible.

“CommInsure accepts that the handling of this claim and complaint fell below community standards and expectations, but it does not accept that it amounted to misconduct under the commission’s terms of reference,” it said.

TAL's Loraine van Eeden gave evidence at the royal commission.

TAL’s Loraine van Eeden gave evidence at the royal commission.

Photo: Eddie Jim

TAL, which hounded a nurse who made a claim due to mental illness, admitted during the hearings that until 2013 it would investigate claims by calling for every kind of report from policyholders’ doctors and would seek out medical information not related to the claim. It said this approach was to determine if they could avoid policy payments on the basis of non-disclosure by the customer of a pre-existing condition.

However, TAL said its conduct was not systemic because the approach was the process adopted throughout the industry at the relevant time.

“The practice, accordingly, cannot constitute conduct that contravened a professional standard or a recognised and widely adopted benchmark for conduct,” TAL said.

Freedom Insurance Group, which stopped direct insurance sales after the royal commission revealed it had sold a life insurance policy to man with down syndrome,  admitted and accepted it had breached anti-hawking provisions when cold-calling some customers. The group announced an executive clean out this week.

Sarah is a business courts reporter based in Melbourne.

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Source: https://www.smh.com.au/business/banking-and-finance/amp-digs-in-over-charging-dead-people-life-insurance-premiums-20181003-p507io.html

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