We have been rocked this week by serious allegations made against the insurance arm of Commonwealth Bank, CommInsure. The allegations include dodgy practices in processing insurance claims, intervention in medical assessing and reporting of claimants’ medical conditions, anachronistic policy wording, delays, and a culture which is seemingly unhelpful in every respect to a series of very unhappy claimants.
It was these very concerns that led to the establishment of the State Government Insurance Commission by the Dunstan Labor government in 1971 and its successor, the Motor Accident Commission, whose job it is to insure and compensate all motor accident claim victims in this state. In its wisdom, our current government is midway through privatising the MAC and returning the handling of claims to private insurers. One wonders what Mr Dunstan would have to say were he still with us today. Actually, we know – just have a glance at the second reading speeches from 1971. It would make some of our current parliamentarians blanch at their folly. In the words of the philosopher Santayana, “those who cannot remember the past are condemned to repeat it”.
What is the CommInsure story all about? Typically, superannuation policies come with life insurance. Other policies are available such as income protection for when you are incapacitated for work, trauma cover for injuries that may not be permanent but which put you out of action for a while, and total and permanent disability cover which is self-explanatory. These are the type of insurance policies that CommInsure offered and about which the complaints and allegations have been made.
Now to a couple of home truths. Unlike our Motor Accident Commission which exists (though not for much longer) for the betterment of the claimant, a private insurance company’s raison d’etre is to make money and return that in share value and dividends to its shareholders. It is only legislation, The Insurance Contracts Act, which ‘keeps the bastards honest’ and attempts to create a level playing field between unsuspecting claimants and wily insurers. Before its introduction in 1984, insured claimants were a deal more exposed.
The second thing to realise is that every insurance policy is a contract between two parties dictated by individual policy wording. They are often very different. Different underwriters are involved and ultimately there are different claims handling approaches and decisions. There is some uniformity to policy writing, but there isn’t consistency in the claims handling approach even between claims handlers within the same company. Never truer is the Latin phrase that lawyers often trot out, caveat emptor. Let the buyer beware.
Let’s not be fooled: no insurance company has a heart and if the allegations are to be believed regarding CommInsure there was a fair bit of culture lacking as well.
If you believe lawyers just get in the way of these matters, tell that to a few of the claimants complaining of their treatment at the hands of CommInsure. It was only when they resorted to legal help and litigation that they achieved anything like justice. However, it is hard to repair all of the damage when years of your life may be lost in no man’s land seeking a decent outcome, all the time enduring financial deprivation while waiting for it. In a perfect world ‘lawyering up’ shouldn’t be necessary, but private insurance companies are hardly altruistic benefactors.
As to insurance lawyers, they are bound by their instructions. The good ones of course advise their insurance clients sensibly, as a dollar spent now is often a good deal saved later on. Think of the losses now to be suffered by CommInsure. Not only do they likely have to pay out claims earlier denied, but what of the damage to reputation? I am presuming that the average punter isn’t now falling over themselves to acquire CommInsure products any time soon! This of course is all before a likely ASIC investigation, possible Senate inquiry, or even, if the prediction of New South Wales Nationals Senator John Williams is correct, a royal commission.
Given that the entire industry is now likely to come under scrutiny the intriguing question will be, is CommInsure alone in its behaviour? Time will tell.
What then of remedies available to disenchanted claimants? The Insurance Contracts Act provides that insurers must act in ‘utmost good faith’, a term now implied in every insurance contract in Australia. It is a duty, incidentally, that applies to the insured party as well.
If a person believes there has been a reach of that duty, a person may apply to the Superannuation Complaints Tribunal for assistance independent of the insurer, or seek damages from a court. It may be smart to get some legal advice before making an application to the Superannuation Complains Tribunal. It is imperative that one seeks legal assistance before wading into a court unless the matter is trite.
As to the privatisation of our Motor Accident Commission, one belatedly feels some vindication for what we as lawyers have been saying all along: we are not best served by private insurers taking over a robust, well-run and successful state insurance scheme that exists for the betterment of all motorists. In spite of all the presumed safeguards, Mr Dunstan will be proved right all along.
Lawyers take no glee in acting for an injured person, just as a doctor takes no glee in treating an unwell patient. However we have a job to do and these revelations demonstrate the importance of our role in representing the interests of those most disadvantaged when pitted against the interests of a corporation. Let’s not be fooled: no insurance company has a heart and if the allegations are to be believed regarding CommInsure there was a fair bit of culture lacking as well. Corporate ‘conscience’ is only ever as good as its leadership and its people.
The decent players in the industry must be dismayed at this turn of events. That said, a fearless and independent investigation and inquiry must follow in order for all Australians to be reassured that their lives, livelihoods and those of their families, will not be destroyed by capricious insurance decisions when they are at their lowest ebb. After all, if you take notice of the seemingly endless torrent of insurance company advertisements depicting every conceivable disaster that we are ever likely to encounter, isn’t that what insurance is all about?
Dealing with insurance companies is a chequered experience. Not all are unreasonable and insurance is essential. My sense however is that this story has in all probability cracked open a festering problem and has a way to go. Watch this space.
Morry Bailes is the managing partner at Tindall Gask Bentley Lawyers, treasurer of the Law Council of Australia and is a past president of the Law Society of SA. The opinions expressed in this column are his own. He is a member of the Liberal Party.
His column appears fortnightly in InDaily.
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