The Colonial Mutual Life Assurance Society (Comminsure) will refund 30,000 customers over A$12m (£6.3m, $8.2m, €7.4m) when it completes its remediation programme by the end of 2019.
This comes after the Australian Securities and Investments Commission (Asic) raised concerns about unfair telephone sales of life insurance at the Commonwealth Bank of Australia subsidiary.
The refunds are to policyholders who were Commonwealth Bank customers between 2010 and 2014 and were sold a range of life insurance products via telemarketing calls by Aegon Insights Australia (formerly known as Aegon Direct Marketing Services Australia).
Review
During Asic’s review of direct life insurance, it identified “concerning sales practices by CommInsure”.
Concerns were raised by the Aussie watchdog with CommInsure about sales of its accidental death insurance product called ‘accident protection’, including that:
- Almost half of all policies sold in 2012-13 were cancelled by the consumer during the cooling-off period or within six months, suggesting consumers may have felt pressured to buy the policy then realised they did not want it or could not afford it;
- Inadequate or unclear descriptions of the product were given, which was particularly concerning due to the extremely limited cover provided by the policy;
- Sales were completed in as little as eight minutes, raising concerns about how the consumer could have made an informed decision about a complex insurance product; and
- Sales representatives often selected the level of cover on behalf of the consumer, further reducing the likelihood that consumers were getting cover that met their needs.
After Asic raised concerns about the sales of CommInsure’s Accident Protection product, CommInsure identified similar concerns with the telemarketing of a range of other life insurance products sold by Aegon between 2010 and 2014.
“Asic is concerned that the way in which these products were sold was manifestly unfair, with customers given insufficient information to make an informed decision,” Asic deputy chair Daniel Crennan said.
Guilty
Also, Comminsure has pleaded guilty to 87 counts of offering to sell insurance products in the course of unlawful, unsolicited telephone calls, contrary to s992A(3) of the Corporations Act.
This is known as “hawking”.
Between October and December 2014, CommInsure, through Aegon, unlawfully sold life insurance policies known as Simple Life over the phone.
CommInsure provided customer contact details to Aegon from CBA’s existing customer database.
The CBA customers had not requested to be contacted for the sale of Simple Life by CommInsure, or anyone on its behalf, or to receive marketing information from the firm.
Failed to meet requirements
In all of the 87 calls charged, CommInsure “did not comply” with the requirement to offer the customer the option of having the information required to be included in the product disclosure statement (PDS) for Simple Life read to them prior to the offer to issue or sell the product.
In 14 of the calls charged, CommInsure also failed to meet the requirements to:
- Give the customer a PDS before becoming bound to acquire Simple Life; and
- Clearly inform the customer of the importance of using the information in the PDS when making a decision to acquire Simple Life.
This matter is being prosecuted by the Commonwealth Director of Public Prosecutions after an investigation and referral of a prosecution brief by Asic.
CommInsure will be sentenced at a later time.
