POWERED BY MOMENTUM MEDIA
RC points to flaws in insurance rules
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has signalled its concern at the legislative arrangements around life insurance, particularly the fact that handling and settling of insurance claims is not a financial service.
In doing so, the Royal Commission has signalled the possibility of greater powers for the Australian Securities and Investments Commission (ASIC) around claims handling and its ability to punish insurers who fail to live up to their duty to act in utmost good faith.
Outlining the direction of the Royal Commission’s current round of hearings into the life insurance industry, counsel assisting, Rowena Orr QC, pointed out that although most life and general insurance policies were financial products and the selling of those policies was a financial service, it was important to note that the handling and settling of insurance claims was specifically excluded from the definition of a financial service.
Orr said this meant that the obligation for an insurance company to do all things necessary to ensure that it provided financial services efficiently, honestly and fairly, did not apply to the process leading to making a decision about a claim, including the investigation of the claim and the interpretation of policy provisions, to negotiations of settlement of 20 amounts, to estimates of loss or damage, value or repair costs, or recommendations on mitigation of loss.
“This limits ASIC’s ability to take action against insurance companies where, for example, there are unnecessary or extensive delays in handling claims,” she said.
“Insurance companies are subject to the provisions of the Corporations Act and the ASIC Act concerning misleading and deceptive conduct, and unconscionable conduct. However, insurance contracts that are governed by the Insurance Contracts Act are not currently subject to the unfair contract terms provisions of the ASIC Act.”
“And the Insurance Contracts Act limits the ability of policyholders to rely on the other consumer protection provisions in the ASIC Act. Because most insurance policies are financial products, chapter 7 of the Corporations Act also imposes extensive precontractual disclosure requirements in relation to those products.”
Recommended for you
The insurance company has joined this year’s awards as a principal partner.
The $135 billion fund has transitioned away from TAL Life Insurance following an “extensive tender process”.
The $80 billion fund is facing legal action over allegedly signing up new members to income protection insurance by default without active member consent.
In a Senate submission, the Financial Services Council has once again called for further clarification that the government will assess the consumer outcomes of group insurance against the enshrined objective of superannuation.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
90.28 3 y p.a(%)
2
GAM LSA Private Shares AU I
37.08 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.44 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.12 3 y p.a(%)
5
Global X GlobalX FANG+ ETF
28.28 3 y p.a(%)
