ClearView Life Assurance will refund approximately A$1.5m (£0.8m $1.18m €0.95m) to 16,000 consumers after the Australian Securities Investments Commission (Asic) raised concerns about its life insurance sales practices.
The firm has stopped selling life insurance direct to consumers.
An Asic review of ClearView’s sales calls found it used unfair and high pressure sales practices when selling consumers life insurance policies. These sales were made directly to consumers, without personal financial advice.
Between 1 January 2014 and 30 June 2017, ClearView sold over 32,000 life insurance policies direct to consumers, 1,166 of which were to consumers residing in high indigenous populated areas who were unlikely to have English as their first language.
The Asic review found that ClearView’s sales staff:
- made misleading statements about the cover, the premiums, and the effect of any of the consumer’s pre-existing medical conditions;
- did not clearly obtain consumer consent to purchase the cover before processing the premium payments; and,
- used pressure sales tactics to sell the policies.
In response to the regulator’s concerns, ClearView will:
- refund full premiums, all bank fees and interest to customers with high initial lapse rates;
- refund 50% of premiums and interest to customers with high ongoing lapse rates;
- offer a sales call review to other eligible consumers and remediate if there is evidence of poor conduct;
- engage auditor EY to provide independent assurance over the consumer remediation programme; and,
- cease selling life insurance directly to consumers without personal financial advice.
Asic deputy Chair Peter Kell said that pressure sales tactics are unacceptable.
“Purchasing life insurance is a key financial decision for consumers, and all the information provided to them must be clear and balanced. Insurers should properly supervise their sales staff and ensure that no misconduct is occurring,” he said.
Asic is currently conducting an industry review of direct life insurance to identify whether there are concerns with sales practices and product design that may be driving poor consumer outcomes in this market.
Where similar conduct is identified, insurers will need to undertake appropriate remediation. Asic will publish the findings of this review in mid-2018.
