CommInsure pleads guilty to illegal insurance telesales

CBA’s CommInsure will refund more than $12m to thousands of customers after pleading guilty to illegal sales practices.

Commonwealth Bank's CommInsure product advertising is seen on a mobile device. Picture: AAP

CommInsure will refund more than $12 million to about 30,000 life insurance customers after pleading guilty to 87 counts of unlawfully selling policies in unsolicited phone calls.

The Commonwealth Bank-owned insurer pleaded guilty on Tuesday to the hawking charges brought by the financial regulator and related to sales made between 2010 and 2014.

The Australian Securities and Investments Commission’s case focused on calls by telemarketing firm Aegon Insights Australia, which had been hired by CommInsure and was using customer contact details supplied by CBA.

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While the details were provided from CBA’s database, the customers had not asked to be contacted for the sale of Simple Life by CommInsure, or to receive marketing information from CommInsure.

In all of the 87 calls, CommInsure did not comply with the requirement to offer the customer the option of having the information required to be included in the product disclosure statement read to them prior to the offer to issue or sell the product.

In 14 of the calls charged, CommInsure also failed to meet the requirements to give the customer a PDS before becoming bound to acquire Simple Life, and inform the customer of the importance of using the information in the PDS.

The case is being prosecuted by the Commonwealth Director of Public Prosecutions after an investigation and referral of the prosecution brief by ASIC.

CommInsure is expected to be sentenced at a later time. Earlier this year CBA signed a deal to sell CommInsure to AIA for $2.37 billion.

ASIC deputy chair Daniel Crennan said the regulator was concerned that the way in which the products were sold was “manifestly unfair”, with customers given insufficient information to make an informed decision.

CBA ceased all telemarketing sales of life insurance in December 2014.

ASIC initially flagged a number of issues with CommInsure over the sale of its accidental death insurance, including the fact that almost half the policies sold in 2012-13 were cancelled within six months and that the speed of sales indicated customers could not have made an informed purchase. CommInsure then identified similar concerns with the selling of more life insurance products.