How life insurers are cracking down on financial abuse

Australian life insurers have been urged to step up and improve support for customers experiencing domestic violence amid warnings that perpetrators are using life insurance policies to financially abuse victims.

New guidance released by the Council of Australian Life Insurers (CALI) has recommended steps for insurers when engaging with and supporting victims of domestic violence. It includes policies looking to prevent perpetrators from weaponising life insurance and marks the latest in a series of efforts from financial firms, including banks, to clamp down on financial abuse.

“Life insurance is supposed to give you peace of mind, but we know that it can be used as a power play by domestic violence perpetrators,” Catherine Fitzpatrick, adjunct associate professor at the UNSW School of Social Sciences, said.

Up to 1.6 million women in Australia have experienced financial abuse at the hands of a partner, according to ABS data.Credit: Steven Siewert

Fitzpatrick, an expert engaged by CALI, said the guide’s release marked a “race to the top” for insurers to provide better customer support, and called on CALI’s 20 members such as Australian Retirement Trust, AIA, Allianz Retire+, Zurich, HCF and MetLife to adopt its recommendations.

Up to 1.6 million women in Australia have experienced financial abuse from a partner, according to the Australian Bureau of Statistics. CALI says in some of the most harrowing cases, perpetrators have committed murder to claim a policy on the victim’s life. To prevent this, one recommendation pushes insurers to consider the “forfeiture rule”, a law principle which prevents anyone who kills a victim from receiving any financial gains from their death.

CILA chief executive Christine Cupitt hopes the initiative will enable insurers to better support victims.Credit: Aaron Francis

Perpetrators can also use life insurance products to threaten a victim’s safety or life on the basis that they will be able to claim on a policy. To safeguard victims from being unknowingly put on a life insurance policy, other recommendations require insurers to seek consent from all parties beforehand, as well as making sure customers are informed of any changes to their policy.

“It potentially can take away that threat, because if you can’t get a life insurance policy out on someone without their consent, then you can’t threaten it,” Fitzpatrick said. “The commitments life insurers are now moving towards recognise that they don’t want their products weaponised by perpetrators, and they’ll take steps to make that much harder.”

Fitzpatrick said: “If you are a customer of a life insurer, you should be asking them ‘do you have these protections that are outlined in this better practice guidance?’”

Other suggestions include having designated staff trained to identify domestic violence victims under extreme stress, and minimising the need for victims to retell their stories when insurers deal with queries or claims.

CALI chief executive Christine Cupitt said: “I don’t want to understate how important this guidance is ... it is an industry-wide concerted effort to improve practice and make sure that customers are treated and cared for by respectful and compassionate human beings.”

The guide, while not mandatory, seeks to expand upon existing practices such as the enforceable Life Insurance Code of Practice, which mandates insurers to take extra care in supporting vulnerable customers and to have a publicly available policy on how they will support victims.

Insurers can decide by July 1 on steps to adopt its recommendations.

If you or anyone you know needs support, you can contact the National Sexual Assault, Domestic and Family Violence Counselling Service on 1800RESPECT (1800 737 732).

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