ASIC fishing in the claims management pond

financial planning insurance ASIC

12 May 2016
| By Mike |
image
image
expand image

The Australian Securities and Investments Commission (ASIC) has admitted that, despite all the recent publicity surrounding CommInsure, it has had little cause to direct its attention towards the claims-handling practices of insurance companies.

The point was made clear by ASIC deputy chairman, Peter Kell, during one of the last public hearings of the Senate Economics Committee Scrutiny of Financial Advice inquiry during which a number of notable claims were made, including suggestions that the Commonwealth Bank's group executive, wealth management, Annabel Spring, was privy to issues within CommInsure, as was CommInsure managing director, Helen Troup.

But in circumstances where ASIC received increased funding in last week's Budget directly related to the CommInsure issue, it is worth noting confirmation from the highest echelons of the regulator that while it was pursuing adviser practices with respect to life/risk, it did not see any particular reason to pursue claims-handling.

While expounding the hard work of ASIC in pursuing advice issues with respect to life/risk, Kell told the committee: "We have not had a significant number of complaints about the claims end of life insurance in recent times. We liaise with the Financial Ombudsman Service (FOS) and the Superannuation Complaints Tribunal (SCT) about those sorts of issues but, in part because of that, it has not had the same level of focus as some of the big problems we have seen at the advice end or through car dealerships."

The ASIC chairman then went on to say, "we are now undertaking a review of industry-wide practices here to determine whether there are red flags, where there might be systemic problems and what should be done about them".

In other words, beyond the allegations raised with respect to CommInsure and the admissions made by the Commonwealth Bank, ASIC held no information of substance which would have given rise to it pursuing an investigation on its own motion.

Now, it seems, it has embarked on a what amounts to a fishing expedition in the claims management arena funded, in part, by the Budget allocations confirmed by the Federal Treasurer, Scott Morrison, in last week's Budget documentation.

So how is ASIC going about this investigation of claims handling? Basically, it is asking the insurers to investigate themselves first before it decides what it ought to do.

As Kell told the Senate Committee, "….there are, broadly speaking two parts to our industry-wide review. The first is that we have written to all insurers asking them to undertake a review of their own claims management practices, their own claims handling in life insurance going back at least five years to determine whether there have been any problematic practices. We have required that there be a level of independent assurance built into those reviews and that they be reported to ASIC; we will then report on those more generally".

"In some of the cases there may be a requirement for remediation to be considered; these sorts of things will play out once those reviews are underway. That is one part of that broader industry review. The other part is work that we are doing to gather information on industry trends and outcomes. For example, we are looking at data from the FOS, from the SCT, from the firms themselves and from consumer organisations that work in this area."

"We are also talking to industry experts and representatives in this area and, of course, our colleagues at APRA [Australian Prudential Regulation Authority] to determine where there might be issues or problems or concerns that have arisen, or particular patterns that may indicate problems or areas where we need to have a further look — whether that is around a particular entity or particular product types or particular definitions. We aim to provide an initial report to government by September this year on that broader industry review. It is likely to lead to, and we expect, follow-up work once we have identified those areas that we should target."

Fishing season has evidently opened, and it seems the regulator is seeking guidance on the best fishing spots.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

1 month 2 weeks ago

This verdict highlights something deeply wrong and rotten at the heart of the FSCP. We are witnessing a heavy-handed, op...

1 month 2 weeks ago

Interesting. Would be good to know the details of the StrategyOne deal....

1 month 3 weeks ago

SuperRatings has shared the median estimated return for balanced superannuation funds for the calendar year 2024, finding the year achieved “strong and consistent positiv...

5 days 9 hours ago

Insignia Financial has confirmed it is considering a preliminary non-binding proposal received from a US private equity giant to acquire the firm. ...

4 weeks 1 day ago

Six of the seven listed financial advice licensees have reported positive share price growth in 2024, with AMP and Insignia successfully reversing earlier losses. ...

3 weeks 3 days ago

TOP PERFORMING FUNDS