Insurer hit with 72 attempted cancellations daily
Freedom received approximately 72 cancellation calls a day from customers for its funeral insurance policy from 1 June 2017 to 30 June, this year, with 13 per cent of those calls coming during the “free” 12-month starting period of the policy, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry heard today.
When asked by Senior Counsel assisting the Commission, Rowena Orr QC, if the high number of attempted cancellations worried Freedom, the insurer’s chief operating officer, Craig Orton, said that it “doesn’t trouble” him.
“Some customers take that knowing they will cancel it [at the end of the “free” year] but will enjoy that protection for that time,” Orton said.
Orr pointed out that Freedom must know that many would not go to the trouble of calling the insurer to cancel the policy at the end of that premium, as was evidenced by the fact that a significant minority of attempted cancellations were during the cooling off period.
“The model is certainly not intended to do that,” Orton said, adding that Freedom often refunded customers who had ended up paying premiums that they did not plan to.
In later evidence, however, Orton admitted that Freedom “shouldn’t” make it as hard to cancel insurance policies as it did, and that its retention policies needed changing. One planned change was making funeral cover at the end of the first “free” 12 months opt-in rather than opt-out.
Evidence tabled before the Royal Commission showed that just 8,118 of customers who attempted to cancel the insurance policy from 1 June last year to 30 June 2018 managed to do so. A further 26.7 per cent of people calling Freedom to cancel cover retained their policy with alterations made to its terms, with the remainder keeping their insurance as was.
During that period, Freedom received 37,584 calls that sought to cancel the cover, of which 28,445 could be linked to an identifiable policy holder. This information was provided in response to a request from the Australian Securities and Investments Commission (ASIC), the details of which Freedom provided to the Commission without also submitting its response.
AUTHOR
Hannah Wootton
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