The CommInsure Scandal – where to from here?
Over the course of the early March, ABC Four Corners and Fairfax media presented their joint investigation into systemic problems at CommInsure, owned and operated by the CBA. Their story was a disturbing tale alleging poor business practices, use of deliberately out of date definitions of medical conditions and bad treatment of customers including people who had been loyal employees. As a financial planner, I have very mixed feelings about the state of affairs.
… at the unconscionable conduct alleged, including denying and delaying valid claims. This is not reflective of the entire industry, though I am not naïve enough to believe that it will be completely isolated to this company.
…that consumers’ confidence in the life insurance industry will be undermined. Life insurance, Total and Permanent Disability Insurance, Critical Illness cover and Income Protection are very important tools to helping secure people’s financial independence in good times and in bad. I worry that distrust in the industry will make conversations about the difficult topic of death and disability will be just that little bit harder than they were yesterday.
… by individuals being prepared to put their own reputations and careers on the line to right the wrongs of poor corporate culture and practices. Sunshine is one of the best disinfectants. Public scrutiny is no replacement for government regulation or legal redress but it does have flow on benefits to industry practice. Every day, major corporations make choices about how to handle specific issues impacting their customers, sometimes those choices come down to a decision between what is easy and cheap vs what is difficult and perhaps more expensive. The ethical implications of a particular course of action can get drowned out by quarterly business unit targets and the pressures to do more with less. It is an unfortunate reality that under stress, good people can do bad things. But one of the side benefits is the subtle change in thought patterns and conversations that happen in the corporate world after one of these unfortunate events. Individuals whose ethical concerns may be ignored or dismissed suddenly have more confidence and are taken more seriously when they raise their concerns ‘Is this the right thing to do?’ and ‘How would this look on the front page of the Age?’
…that the increased focus on life and disability insurance, its underwriting and its claims process will start to address some of the historical problems in the industry, such as improving the way mental illness is assessed by many policies. Jeff Kennett, spokesperson for Beyond Blue has highlighted what many of us in the financial services industry are keenly aware of: the insurance application process often penalises individuals who seek treatment for mental health issues. Seeking advice and assistance early to address any issues is one of the most important ways to protect your long-term health. The insurance industry is making some moves in this area but it still has a way to go before it deals with this issue in a way that delivers value for itself and its customer base.
So What Should I do about my Insurance?
If one hospital or supermarket encounters a serious problem it doesn’t stop you seeking health care or buying groceries. Similarly CommInsure’s poor practices does not mean you should cancel or avoid life insurance all together. There are a number of Income protection and Total and Permanent Disability insurance are important parts of the financial foundations for those of us who rely on our incomes to fund our housing and day to day living expenses. You can learn more about how these insurances work at in our articles about income protection and insurance for single people.
Much is talked about the conflict of interest in the financial planning industry, particularly when many financial planners rely on life insurance commissions fund their businesses, we don’t work that way. Finance Women is a fee-for-service practice, any commissions paid by the life insurance companies are paid back to our clients. If you would like some advice about your insurances please don’t hesitate to get in contact.