More than 300,000 crimes or potential crimes were revealed over a fortnight as the Hayne royal commission grilled insurance company executives on matters ranging from wanton privacy intrusions and bullying tactics to offensive communications and charging premiums to dead people.

In closing comments wrapping up the insurance round of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, counsel assisting fastidiously detailed a long list of potential crimes by some of the nation’s biggest insurers.

On Wednesday the royal commission made a range of proposals that have the capacity to alter the insurer’s business models.

A policy paper flagged that insurers could be stopped from undertaking surveillance for people who have been diagnosed with mental health issues. It also questioned whether there should be minimum standards  for life and total permanent disability insurance obtained under group insurance policies.

Friday’s hearing was the last before Commissioner Kenneth Hayne files his interim report to the federal government, which is due on Sunday. The commission will hold one last round, in Sydney in November, when the chief executives of Australia’s biggest financial institutions will face questions over policy solutions.


In closing submissions on Friday, counsel assisting, Rowena Orr, pointed to the outdated heart attack definitions of CBA’s former insurance arm, CommInsure. The insurer might have breached the ASIC Act in making false and misleading statements about coverage for heart attacks in its trauma policy that implied the policy covered all heart attacks when this was not the case.

CommInsure may also have breached its duty under insurance law to act with utmost good faith towards its customers, Orr said.

There was also a “troubling lack of respect” for the Financial Ombudsman Service, Orr said, and CommInsure’s withholding of a doctor’s medical opinion from the Financial Ombudsman Service during a dispute with a customer over a claim might amount to misconduct, she added.


Insurance giant TAL’s “excessive use of surveillance”, “bullying tactics and offensive communications” and “misrepresentation of policy terms” created the potential for misconduct findings, and TAL accepted it had breached its duty of utmost good faith to policyholders, Orr said. TAL had also provided misleading information to the Financial Ombudsman Service.

Loraine van Eeden, TAL’s general manager of claims, had accepted that until 2013, it was TAL’s practice to bring in extensive medical information about insurance claimants to determine whether their policies could be avoided on the basis of non-disclosure, Orr said.

In 2016, case managers were authorised to conduct general reviews, which van Eeden conceded were “fishing expeditions” for adverse non-disclosures, Orr said.

Van Eeden had also accepted “that the fact that there was (sic) so many problems with so many people involved over such a lengthy period of time was telling in terms of TAL’s culture,” Orr said.


Counsel assisting, Mark Costello, put the spotlight on AMP, saying it had potentially committed crimes by failing to properly report to the corporate regulator it had charged dead people for life insurance.

“By what right is it deducted?” Hayne interjected. “How do you deduct a premium for life insurance on a life that is dead?”

It also emerged AMP had defaulted members as smokers in circumstances where it was unlikely the member did smoke, raising their premiums.


Costello said Hayne was open to find industry super fund REST had engaged in multiple acts of misconduct in continuing to deduct insurance premiums from members that were no longer covered, due to changes in their employment status or falling below the minimum balance threshold.

Financial Services Council

Before giving her closing comments, Orr had questioned Sally Loane, chief executive of the Financial Services Council, over its opposition to a ban on the direct selling of insurance products by telephone and its opposition to an extension of ASIC’s powers that would’ve allowed the regulator to oversee the handling and settlement of insurance claims.

Loane said the Life Insurance Code of Practice was relatively new and the FSC “would like to see the code play out” and assess if it is “working” before supporting statutory obligations for the handling and settlement of insurance claims.

Orr also questioned Loane about her statement that obligations in the code were “aspirational” and “not easily translated into law”.

“We want them to be adhered to 100 per cent of the time but sometimes there may be circumstances where they cannot be,” Loane replied.

Loane later accepted “aspirational” may not have been the best choice of words.

Meanwhile, the Australian Securities and Investments Commission released a report on Tuesday that stated the corporate watchdog  had “identified serious, unacceptable delays in the time taken to identify, report and correct significant breaches of the law among Australia’s most important financial institutions”.

The report found delays in remediation for consumer loss. It took an average of 226 days from the end of a financial institution’s investigation into the breach until the first payment to affected consumers, the corporate watchdog stated.

ASIC stated that the “significant breaches”  caused financial losses to consumers of around $500 million, “with millions of dollars of remediation yet to be provided”.

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