Insurance in focus at sixth round of RC hearings

The sixth round of public hearings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry began in Melbourne this week (10 September).

This week’s hearings are looking at life insurance, while next week’s will cover general insurance.

On Monday (10 September), the commission heard of admissions of misconduct by several life insurance companies — including AIA, AMP and ClearView — and included misleading advertising, exploitative sales techniques and overcharging, among a ream of other issues.

Yesterday’s hearings also brought to the stand ClearView’s chief risk officer, Gregory Martin.

Counsel assisting Rowena Orr outlined that ClearView had been deliberately targeting people from a “lower socio-economic bracket” and was sometimes selling insurance policies to those who “couldn’t afford the product”. She also outlined that the sales pitch to “poorer people” was largely emotional whereas the pitch to more affluent people was both emotional and educational (i.e. provided more detail about the policies).

Running until 12 September, the hearings will consider issues associated with the sale and design of life insurance and general insurance products, the handling of claims under life insurance and general insurance policies, and the administration of life insurance by superannuation trustees.

The hearings will also consider the appropriateness of the current regulatory regime for the insurance industry with case studies from the Financial Services Council, Insurance Council of Australia and the Code Governance Committee.

As part of the hearings, the commission will consider case studies from a range of companies, including AMP, CommInsure, Allianz, Youi and AAI (Suncorp).

These will also include the natural disaster case studies that were originally to have been examined in the fourth round of public hearings.

An interim report of the first four rounds of hearings are expected by 30 September. 

The interim report is expected to identify a “number of policy-related issues” arising from the commission’s hearings covering consumer lending, financial advice, SME loans and the experiences of regional and remote communities with financial services entities.

The public will be invited to make submissions on policy issues raised in the interim report.

The final round of hearings will focus on policy questions arising from the first six rounds and will take place from 19 November.

[Related: Trust in the ethics of the finance sector drops]