$102 million to be repaid after dodgy insurance tactics


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ASIC has so far secured more than $102 million in remediation for Freedom Insurance customers and is urging anyone else who purchased life cover through the now-defunct insurer to come forward.

Freedom Insurance went out of business after ASIC's review of the sale of direct life insurance and subsequent Royal Commission hearings uncovered the then-listed insurer's shocking and harmful sales tactics.

In September 2018, the Royal Commission heard how Freedom sold life insurance to an intellectually disabled man in 2016. The insurer then delayed cancelling the policy despite numerous requests from family members, took almost two years to respond to additional requests from the family, including for an apology, before issuing an apology weeks before fronting Commissioner Kenneth Hayne.


Three months later it ceased selling life insurance and flagged the likelihood of a liquidity crisis before suspending trading in February 2019 before committing to divest all its operations - including financial advice business Spectrum Wealth Advisers - and eventually appointing liquidators in February 2020.

The policies distributed by Freedom were issued by AIA Australia, NobleOak Life, Swiss Re Life and Health Australia and ClearView Life Assurance.

ASIC has been working on the Freedom case since, having implemented a ban on 'cold call' telephone sales of direct life insurance and consumer credit insurance in 2019 and suing both the company's former managing director and former quality assurance manager.

A remediation program was commenced by AIA Australia, NobleOak Life and Swiss Re Life and Health Australia in February 2020 for customers who were sold policies between October 2010 and October 2018. ClearView Life Assurance commenced a separate remediation program in June this year for those who were sold accidental death, accidental injury and life insurance policies between July 2011 and February 2014.

In total, $102 million has been paid or will soon be paid to about 83,600 customers who were impacted by Freedom's misconduct.

"Freedom Insurance used harmful sales practices to sell funeral, accidental death and life insurance policies to vulnerable customers. They also used unfair retention practices to keep customers in the policies when they tried to cancel," says ASIC deputy chair Karen Chester.

Cat Newton, assistant director of policy and campaigns for Consumer Action, says: "This has been a decade-long disgrace - starting with junk funeral insurance policies, which were flogged to unsuspecting consumers using pressure tactics, by sales staff motivated by problematic sales incentives, to a woeful remediation program that failed to clean up the mess."

ASIC believes there are thousands of customers that likely remain entitled to a refund but haven't come forward to claim it.

"We encourage Freedom Insurance customers from between 2010 to 2018 who believe they were mis-sold a policy, or who tried to cancel their policy without success, to contact their insurers and be assessed for remediation. We have published information on ASIC's website about the steps customers can take to seek a refund, including the contact details for each insurer," Chester says.

ASIC's case against former Freedom managing director Keith Cohen and quality assurance manager Robert Oayda is ongoing with the next case management hearing scheduled for this Friday, August 19.

This article first appeared on Financial Standard

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Jamie Williamson is editor of Financial Standard. Prior to this she was a senior journalist, covering wealth management including financial advice, superannuation and life insurance. Before turning to journalism, she worked in public relations, specialising in financial services. She has a Bachelor's degree in communications from the University of Newcastle.