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19-357MR ASIC commences proceedings against TAL Life Limited for handling of insurance claim
ASIC has commenced proceedings in the Federal Court against TAL Life Limited (TAL) for alleged breaches of the ASIC Act, the Corporations Act and the Insurance Contracts Act, regarding a claim made under an income protection policy. ASIC’s investigation arose out of a referral made by the Financial Services Royal Commission.
The consumer (whose identity was the subject of a non-publication order during the Financial Services Royal Commission) first made a claim under her income protection policy in January 2014 after she was diagnosed with a medical condition. After obtaining the consumer’s medical history, TAL sent a letter confirming that her policy would be avoided on the basis that she had failed to disclose some unrelated prior medical history. In that letter, TAL asserted that she had breached her duty of good faith under s13 of the Insurance Contracts Act.
ASIC alleges that TAL’s investigation of the consumer’s medical history was based on false statements made by TAL in a Claims Pack sent to her.
ASIC also alleges that in sending a letter to the consumer, in which it avoided the insured’s policy, TAL:
- avoided the policy without first offering the insured an opportunity to address concerns, and
- accused the consumer of breaching her duty of disclosure and her duty of utmost good faith under the Insurance Contracts Act.
ASIC is seeking civil penalties in relation to the alleged breaches of s12DB of the ASIC Act and declarations in relation to s12DA of the ASIC Act, s1041H of the Corporations Act and s13 of the Insurance Contracts Act.
The maximum penalty for a breach of s12DB (false or misleading representations) at the time of the conduct is 10,000 penalty units or $1.7million. Section 13 of the Insurance Contracts Act did not have a penalty at the time of the conduct. If the conduct were to occur under the new penalty regime, effective from March 2019, the maximum penalty would be $1.05 million.
The Government is currently consulting on an Exposure Draft in relation to insurance claims handling.
ASIC supports this proposal as improving the conduct engaged in by or on behalf of insurers during the claims handling and settling process.
TAL was an Insurance Case Study detailed in the Financial Services Royal Commission Volume 2 Final Report (pg 331).
ASIC’s action against TAL falls within ASIC's Wealth Management Major Financial Institutions Portfolio. The Portfolio focuses on the financial services conduct of Australia's largest financial institutions (NAB, Westpac, CBA, ANZ, Macquarie and AMP) with respect to credit and retail lending, financial advice, fees for no service, superannuation trustees, insurance, unfair contract terms and other licensee obligations, and other conduct arising from the Financial Services Royal Commission.
The First Case Management Hearing is listed in Melbourne on 31 January 2020 at 9:30am.
Editor’s note 2:
The First Case Management Hearing which was scheduled for 31 January 2020 has been vacated.
The court ordered that “…the true name, contact and other information tending to reveal the identity of the person known as the “Second Insured” during the TAL case studies heard as part of the sixth round of hearings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry be prohibited from being published in relation to this proceeding.”
The court also ordered TAL to file and serve a Concise Statement on or before 4pm on 21 February 2020, and that the proceeding be transferred to the New South Wales District Registry.
The matter has been listed for a Case Management Hearing on 2 March 2020 at 9:30am.
Editor's note 3:
The Case Management Hearing which was scheduled for 2 March 2020 has been vacated.
The Court ordered that the matter be listed for a three day trial, commencing on a date to be fixed.
The parties are to complete a number of steps towards trial, including the filing of a Statement of Agreed Facts by 4pm on 10 April 2020.
The matter has been listed for a Case Management Hearing on 15 June 2020 at 9:30am.
Editor's note 4:
A Case Management Hearing was held by videoconference on 31 March 2020.
The next Case Management Hearing is to be held not before 21 September 2020.
The matter is to be listed for an estimated three-day trial between 12 October and 29 October 2020.
The parties have liberty to apply.
Editor's note 5:
The next Case Management Hearing has been scheduled for Friday 25 September 2020 at 9.30am.
The matter has been listed for a three-day trial, from Tuesday 13 October to Thursday 15 October 2020.
Editor’s note 6:
On 10 July 2020, ASIC filed an amended Originating Process and Concise Statement to clarify parts of ASIC’s case.
Editor's note 7:
On 13 and 14 October 2020, the trial took place before Chief Justice Allsop. Judgment has been reserved.
Editor's note 8:
Judgment will be handed down on Tuesday 9 March 2021 at 2.15pm AEDT.