Week two of the insurance sessions of the Royal Commission sees most of the attention focussed on general insurance – for the Commission’s purposes, that means: travel, car and home insurance. But not before we get a final taste of some life insurance mis-deeds. Also, another senior exec falls, to be replaced by a former Premier...
Life Insurance – We’re Not Done Yet!
Before moving onto general insurance, the Commission heard that AMP charged more than $1 million in premiums to people who they knew had died. The current figure is actually $1.3 million – relating to 4,600 superannuation clients who had passed away – although AMP says the total number may yet be higher still.
AMP blamed “system errors” that meant it did not stop deducting premiums for life insurance from dead members’ accounts or did not process premium refunds owed to them, despite being notified of their deaths.
AMP knew about the issue in 2016, but it wasn't until April 2018, when a similar issue involving the CBA was exposed at the Royal Commission, that AMP started investigating the matter.
The Royal Commission heard, that the insurer received an internal complaint in 2016 (about it's practice of charging insurance premiums to dead members’ accounts) and stopped it's charges only when a customer’s claim had been paid out. It did not report the breach at the time.
When asked, “do you accept that AMP’s conduct in respect of the charging of premiums for group life insurance where the member has passed away is conduct falling below community standards and expectations?” Paul Sainsbury, AMP’s Group Executive of Wealth Solutions replied, “yes”. Commissioner Kenneth Hayne asked Sainsbury whether AMP had been charging for something it was not entitled to charge for.
“Yes it has,” Sainsbury replied.
To break the monotony, and hopefully add some levity to this Commission, our office started thinking about what could be a good soundtrack to this Royal Commission. Could you go past Brittany Spears “Oops, I did it again” - which was released nearly 20 years ago. At the turn of the millennium…GASP!
Your nominations are welcome in the comments section.
General Insurance Begins
In tenuously connected news, purely because it goes so far back in time: although only notifying ASIC in June this year, Allianz admitted to selling more than two million travel insurance policies, during a period when it's website contained misleading and deceptive information, from this year and dating back to 2012. Misleading statements such as "wherever you go, whatever you need" and "unlimited cover" stayed on it's website for six years, despite numerous warnings from its in-house lawyer.
When queried about the time it had taken to remedy the marketing material, in light of the evidence, Allianz said they were aware of the misleading information, Allianz executive Michael Winter agreed that it demonstrated that it was more important at Allianz to protect the bottom line than to stop misleading its customers.
Winter was asked to return to the Royal Commission on Tuesday over “tensions” between his evidence, and his original statement.
NAB announced to the Australian Stock Exchange (ASX) that former head of wealth, Andrew Hagger was leaving the bank, after a decade in the job. He was directly criticised at the Royal Commission last month, for the evidence he provided about NAB’s "fee-for-no-service" scandal.
In a statement released to the ASX on Monday, Hagger said "I take accountability for what has occurred on my watch, and accept that alongside successes were failures, including instances where we did not act with the pace required.”
According to closing submissions, filed in August by Counsel Assisting the Commission, Hagger's evidence “that he 'left the door open' for ASIC to ask the question reveals both a disrespect for the role of the regulator and a disregard for the gravity of the events in question.”
Former NSW Premier Mike Baird will replace Mr Hagger, shifting from Head of NAB's Corporate and Institutional Bank to Chief Customer Officer of Consumer Banking. NAB said Mr Baird will "take a lead in the setting of our reputation agenda", including helping to restore community trust.
Let’s wish him well and hope his judgment is better than when he messed with the dishlickers back in 2016.