ASIC allowed CBA’s life insurance arm, CommInsure to make a “community benefit payment” to resolve cases of misleading advertising which could have cost millions in fines, the royal commission inquiry has heard.
The inquiry also heard that CommInsure was allowed to suggest edits to a media announcement about the misleading ads to remove any admission that the insurer accepted the ASIC complaint.
The revelations relate to ASIC’s handling of a series of advertising pamphlets the corporate regulator said were misleading because they suggested CommInsure would offer coverage for all types of heart attacks – a misconduct which could have drawn $8 million in fines, Reuters reported.
ASIC raised concerns about certain instances of CommInsure’s life insurance ads, after commencing an investigation in April 2016. This included a review of CommInsure’s advertising of two life insurance policies: Total Care Plan, sold through financial advisers; and Simple Life Insurance, sold directly to consumers.
The review looked at advertising from mid-2013 to March 2016 and found that misleading and deceptive statements are likely to have been made on some of CommInsure’s websites about the extent to which customers would be entitled to cover for trauma if they suffered a heart attack.
According to ASIC, the statements may have led a policyholder to believe they would be entitled to a lump sum payment if they suffered a heart attack in general, when in fact only certain types of heart attacks, which met certain medical criteria as defined in the policy, were covered.
In response to ASIC’s concerns, CommInsure will commission an external firm to conduct a compliance review of its advertising sign-off processes and procedures. CommInsure will report to ASIC by 30 June 2018 on the results of the review and the changes implemented.
Helen Troup, CommInsure’s executive general manager, said ASIC had asked in a series of 2017 emails if they could resolve the matter with a $300,000 “community benefit payment”, and the insurer agreed.
CBA’s life insurance unit was sold to Hong Kong-based AIA Group for $3.1 billion last year, but the sale is still to be completed.