Banking royal commission: CommInsure denied breast cancer claim despite doctors’ pleas

CBA knocked back a life insurance claim from a woman who had breast cancer despite the pleadings of doctors.

Commonwealth Bank knocked back a life insurance claim from a woman who had breast cancer despite the pleadings of doctors and by relying on a two-decades old medical definition that it refused to backdate.

The bank’s life insurance division, CommInsure, also misled customers by knocking back the claim on the basis breast surgery was not “radical” enough, despite not telling customers what it thought radical breast surgery actually was, the royal commission heard.

Taking the witness stand for a second day of questioning, CommInsure boss Helen Troup also admitted for the first time the company had misled customers over information provided in its ads for trauma cover that led people to think any heart attack would be covered. In fact, the product disclosure statement said only severe heart attacks were covered.

The admission came despite a lengthy campaign to play down concerns of the Australian Securities & Investments Commission that CommInsure was breaching laws barring misleading and deceptive behaviour. ASIC failed to take action against the group for breaches that would have resulted in a maximum $8 million penalty.

Instead, the royal commission heard CommInsure made a $300,000 payment to a community benefit program for the transgressions, but did not acknowledge any wrongdoing.

Ms Troup said she didn’t remember how the $300,000 figure was decided, but it was well below the maximum penalty for four contraventions of section 12DB of the ASIC Act for misleading and deceptive conduct, at almost $2m per contravention.

The revelations prompted royal commissioner Kenneth Hayne to interject and ask Ms Troup whether she thought the company got off lightly.

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“At the end of the day, Ms Troup, did CommInsure come out of this process thinking that it had been punished or brought to book,” Mr Hayne said. “Yes we did, sir,” Ms Troup said.

Counsel assisting the royal commission probed why Ms Troup was willing to concede it had misled customers now, despite fighting the accusation for years.

“What is different?” Ms Orr asked. “I don’t understand the difference between CommInsure’s position at this time and your evidence in the royal commission today?”

Ms Troup responded: “I think at that time we were still defending our position. Sitting here now looking at their position I can see how ASIC’s position is legitimate.”

Ms Orr asked: “CBA was not prepared to acknowledge that, and has never publicly acknowledged that at any time before today?” Ms Troup said: “That’s right.”

It came amid shocking revelations that CommInsure had gone out of its way to deny the claim of a woman who was struck by breast cancer, rejecting her application on the basis that her surgery did not result in a complete removal of the breast, while ignoring numerous letters from doctors confirming the diagnosis and detailing the invasive surgery she suffered.

A doctor had told CommInsure that if the woman’s cancer had occurred 20 years ago when the policy was taken out, treatment would probably have resulted in a mastectomy, but it was now current practice that the condition would be treated with less invasive surgery and radiotherapy.

CommInsure relied on an 18 year old medical definition, from 1998, for the claim that was made in 2016. CommInsure insisted that the claim would only be paid for a full mastectomy, even though the policy document did not say this anywhere.

The woman had held the CommInsure policy since 1996.

The company did not update its policy to reflect contemporary medical practice until mid-2017, but CommInsure didn’t backdate the definition and as such, didn’t apply it to the woman’s claim.

“You didn’t think that this definition was out of date, the definition that had been in place since 1998?” Ms Orr asked. “No,” Ms Troup said.

But Ms Troup did admit the company had made errors.

“I think there were two errors that occurred that our processes and procedures should have addressed,” Ms Troup said.

Ms Troup said medical opinions should have been reviewed and there should have been a review of why independent doctors were saying one thing and the bank’s doctors were saying something else.

“Firstly, the process that she had to go through … didn’t meet the standards we expect. I imagine it caused her additional stress. Her claim should have been paid earlier.”

Ms Orr said there was an issue across the industry of using out of date medical definitions to deny claims.

“ASIC considered, and we agree, that out of date medical definitions are out of step with community expectations,” she said.

Yesterday the royal commission heard how CBA misled Financial Ombudsman Service by covering up advice it had received from a doctor when the customer complained. It also heard how CBA routinely ignored the medical advice of its own employed doctors, and kept policies out of date in order to reject claims because it would cost the company more money to update policies.