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18-029MR ClearView refunds $1.5 million for poor life insurance sales practices
ClearView Life Assurance Limited (Clearview) will refund approximately $1.5 million to 16,000 consumers after ASIC raised concerns about its life insurance sales practices. It has also 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 by phone. These sales were made directly to consumers, without personal financial advice.
ASIC's review raised concerns that between 1 January 2014 and 30 June 2017, when selling 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, ClearView 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 ASIC's concerns, ClearView will:
- refund full premiums, all bank fees and interest to customers with high initial lapse rates
- refund 50 per cent 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 an independent expert (EY) to provide independent assurance over the consumer remediation program; and
- cease selling life insurance directly to consumers (that is, 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.
ClearView will contact eligible consumers. Consumers with questions about the remediation can contact ClearView on 1800 213 839 or via email at firstname.lastname@example.org.
ASIC's MoneySmart website includes information about who is due a refund, how refunds will be paid and how to make a complaint if consumers have concerns about any life insurance they have been sold over the phone.
ASIC recognises ClearView's response to addressing its concerns.
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.
ClearView sales staff were selling 'direct life insurance' which is sold to individual consumers without personal advice. It can include cover for events including death, accidental death, specific injuries, serious illness, total and permanent disability, unemployment and funeral cover.
This outcome is the result of work by ASIC's Indigenous Outreach Program (IOP), which is staffed by lawyers and analysts, the majority of whom are Indigenous.