Life insurance specialist TAL has acknowledged the Federal Court’s judgement that it breached its duty to act with utmost good faith under the Insurance Contracts Act.
Following a case study by the Royal Commission into Financial Services, the Australian Securities & Investments Commission (ASIC) accused TAL of false or misleading conduct in handling a customer claim made in January 2014 under an income protection policy by a customer who was diagnosed with cancer. It also claimed that the insurer avoided the policy on the basis that the insured had failed to disclose an unrelated prior medical history.
In the 62-page ruling, Chief Justice Allsop stated: “TAL failed to act towards the second insured with decency and fairness in reaching its decision without giving the second insured a proper opportunity to put material to TAL.”
TAL acknowledged the court’s dismissal of ASIC’s allegations of false or misleading conduct in handling the claim and the findings that it breached its duty of utmost good faith relating to some aspects of the claim handling.
“At all times, during the claims assessment process, we endeavour to employ an empathetic and sensitive approach and communicate fully with our customers, and we have previously acknowledged that aspects of the handling of this claim fell below those standards,” TAL said in a statement.
“This is not representative of the claims experience we endeavour to provide for our customers, and we continue to refine and improve that claims experience to provide the best possible support for our customers and community.”
ASIC Commissioner Sean Hughes warned insurers to act consistently with commercial standards of decency and fairness to ensure that claims are handled in a fair, transparent, and timely manner.
“These stories matter not just to individual policyholders, but to the reputation of the market as a whole,” Hughes said. “The community expects to be treated fairly and with dignity and respect by their insurers. The duty of utmost good faith is a long-standing core principle in the relationship insurers have with their policyholders. It fundamentally underpins the trust which consumers place in their insurers.”
