A senior analyst with the Commonwealth Bank’s insurance arm has accused some cancer patients of “taking advantage” of life insurance by setting up policies soon before they die.
Speaking at an Association of Superannuation Funds of Australia luncheon in Brisbane last week, Annette Torrington, a senior product manager with CommInsure, a subsidiary of the Commonwealth Bank, left some attendees “appalled” over some of the examples used to make her points.
Talking to about 200 Queensland super fund and insurance representatives about challenges faced by the industry, Ms Torrington was said to have spoken about cancer patients taking advantage of generous policy conditions by taking out life insurance policies which did not rely on medical checks before dying.
Another client with mental health issues was said to have made a career out of claiming from his income protection policies.
Media representatives for Commonwealth repeatedly told Fairfax Media Ms Torrington’s comments had been “taken out of context” but refused to elaborate.
Ms Torrington spoke about the automatic acceptance level, a policy measure which sets a maximum level of insurable cover available without a medical check.
An attendee told Fairfax Media Ms Torrington referred to CommInsure having to payout “to more than 30 cancer patients, over the last five years, who 'took advantage' of the insurance arrangements and then ‘died within six months of joining the fund’.”
“There were a number of people who drew breath in surprise,” the attendee said. "You could see it in their face. There was just shock."
“When she spoke about the cancer cases, she said, point blank, these members were taking advantage of their insurance policy, with no thought of what the member was going through.
“We work in the industry so we know people do die, and we appreciate the importance of people having the right policy. But to hear from someone who really is an industry leader describe it in those terms, it was appalling.
“She also used an example of someone with mental illness making multiple claims, and basically made a joke of how they had ‘made a career out of claiming’, basically saying that someone with mental illness actually chased insurance claims for a living.
“The overall point was the insurance industry needs a shake up because customers were taking advantage – no mention that there were loop holes in the policy which was on the insurance side.”
Another attendee also said he was shocked.
“There were audible gasps when she gave the cancer example” he said.
“She was talking about how super funds basically went crazy by offering high levels of insurance without doing the responsible ‘underwriting’ and now that people have insurance they are using it, which is costing heaps and we need to wind it back.
“Which is fine, but to use the example she used, that went too far in my opinion. Fix the policy, don’t blame clients who are making legitimate claims.”
However another attendee, who also didn’t want to give their name, given the small size of the Queensland industry, said there was “nothing raised which we haven’t talked about within the industry”.
“There will always be someone trying to take advantage,” he said.
“There have been hard times and the market has changed and from that point of view there was nothing untoward in what she was saying. Nothing that shocked me.”
The latest Australian Prudential Regulation Authority report into life insurance policies recorded a net profit of $2 billion for the industry in the year to March 2014, a 34.7 per cent decrease from the previous year’s profit of $3 billion. But the March 2014 quarter profit of $672 million saw a 40.2 per cent improvement on the previous quarter.
CommInsure generated $716 million in income for the Commonwealth Bank last year, a 4 per cent increase on its previous return.