Commonwealth Bank’s CommInsure arm hits back over insurance allegations

The Australian 12:41pm December 7, 2016

Michael Roddan

Commonwealth Bank of Australia’s under-pressure life insurance arm CommInsure said it has not yet found any evidence of wilful misconduct or wrongfully knocked back claims in any of its internal or independent reviews.

In a submission to a parliamentary inquiry into the $44 billion life insurance sector, CommInsure hit back at a number of claims which have besieged the company over the last year.

An independent review of declined claims over the last five years by Deloitte is currently around 90 per cent complete, and CommInsure said it had not revealed any “systemic issues” regarding inappropriate denials of claims. The company and independent reviewers have “electronically” reviewed more than five million emails and documents, manually reviewed around 200,000 documents and carried out around 80 interviews as part of the process.

CommInsure was earlier this year hit with allegations it was using outdated medical terms to deny claims, was pressuring doctors to turn down claimants and was using overly zealous surveillance on customers who filed insurance claims.

The company has since lost three lucrative superannuation contracts thought to be worth around $200 million in revenue as the superannuation sector rethinks its relationship with CommInsure.

“CommInsure has taken the allegations in the media directed towards it seriously. It is determined to reassure customers, members, clients, advisers and employees that CommInsure is committed to securing and enhancing their financial wellbeing,” the submission said.

As the prudential regulator APRA continues to pressure the industry to update its systems, which were found to be full of dated and duplicated policies, CommInsure said it had spent more than $50 million in its claims systems and processes over the last three years and would continue to invest. CommInsure said it had handed around 60,000 emails and documents to APRA, which has direct access to the independent reviewers.

CommInsure also said it was “overall” satisfied that staff incentives would not lead to adverse customer outcomes, following an independent review of KPIs for the last two years.

“Any incentives generally represent a small proportion of a CommInsure claims staff member’s overall pay,” the submission said.

The company said it was satisfied assertions it “massively” increased surveillance of claimants in 2013 were incorrect. Insurers can legally gather information, investigate and monitor customers who lodge claims.

“While there was a small increase in overall investigative activity, there was no material change in the number of cases under surveillance,” CommInsure said. “CommInsure is committed to the Life Insurance Code of Practice, which includes standards for life insurance claims surveillance.”

The life insurance sector code of practice, developed by the Financial Services Council industry body, came under sharp criticism after it was launched in October for refusing to commit to making the code enforceable by the corporate watchdog ASIC. The code seeks to limit where and when companies can conduct surveillance of claimants.

The company also took issue with a number of allegations made by CommInsure whistleblower Benjamin Koh, the insurer’s former chief medical officer who was dismissed for a privacy breach unrelated to his whistleblowing.

Dr Koh is taking legal action against Commonwealth Bank in relation to the termination of his employment and Commonwealth Bank is defending the matter.

CBA has said Dr Koh sent 260 CommInsure documents to his personal Gmail account in breach of bank policy, which Dr Koh said was done out of fear the files would be lost after allegedly finding some files had gone missing. Dr Koh said repeated attempts to resolve concerns internally were ignored.

CommInsure said it took Dr Koh’s concerns seriously and it rejected assertions that it was not responsive to issues raised by employees.

“It investigated concerns about medical files when they were initially raised in late 2014. The investigation, completed in March 2015, found no evidence of files being maliciously deleted or tampered with, as was alleged,” the submission said.

“As part of its ongoing investment in claims technology, CommInsure has introduced a new claims management technology platform. Medical referrals are now stored in this system.”

APRA chairman Wayne Byres has said the regulator has met CommInsure whistleblower Benjamin Koh and was “considering whether the whistleblowing provisions in the Life Insurance Act, designed to prevent the identification and victimisation of whistleblowers, have been adhered to”.

CommInsure has also set up a claims review panel to comb over complex claims, which includes two independent panellists.