ASIC has launched a major investigation into a mid-tier personal insurer, after a whistleblower made claims of misleading and fraudulent sales practices.
Earlier this week, Fairfax Media reported the account of a former Combined Insurance employee, who claimed there was a toxic sales culture at the American-owned firm, with churning and the selling of unnecessary products endemic.
Fairfax cited leaked company documents revealing the intense pressure on staff to sell as many policies as possible. Whistleblowers have alleged agents were encouraged to not disclose customers’ pre-existing conditions.
In one case, a former customer alleges he and his wife were sold policies despite the agents being repeatedly told of recent health issues. When they tried to claim in relation to a subsequent illness, their claim was denied because of non-disclosure.
The life insurance industry is currently debating the future role of commissions in the financial advice industry, after an ASIC investigation last year found generous commission models were causing an unacceptably high rate of poor advice.
NIBA CEO Dallas Booth says the allegations are part of the reason consumers should always seek insurance advice from a qualified, professional insurance broker.
“With their understanding of the insurance market and their access to a wide range of insurers’ policies, brokers are perfectly placed to assist consumers in making sure that their individual insurance needs are covered,” he says.
“All NIBA member brokerages are obliged to subscribe to the Insurance Brokers Code of Practice and enshrined in the Code is an agreement that NIBA member brokers will, at all times, act in the best interests of their clients.”