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ClearView learns the price of poor sales practices

Monday 12 February 2018

Insurance company, ClearView Life Assurance, will pay $1.5 million in compensation to 16,000 consumers who were victims of unfair sales practices.

This is after the Australian Securities and Investments Commission (ASIC) raised concerns about ClearView’s sales practices. The corporate regulator found ClearView used ‘unfair and high pressure’ when selling life insurance policies by phone.

“Purchasing life insurance is a key financial decision for consumers, and all the information provided to them must be clear and balanced. Insurers should properly supervise their sales staff and ensure that no misconduct is occurring,” ASIC Deputy Chair Peter Kell said.

The regulator’s review raised flags for the period between 1 January 2014 and 30 June 2017.

During that time, 32,000 life insurance policies were sold directly to customers. Of those, 1,166 lived in ‘high indigenous populations’ and were unlikely to have English as their first language.

According to ASIC, the staff of ClearView:

  • made misleading statements about the cover, premiums, and the effect of the consumer's pre-existing medical conditions;
  • did not clearly obtain consumer consent to purchase the cover before processing the premium payments; and
  • used pressure sales tactics to sell the policies.
 In response to ASIC’s review and concerns, ClearView will:
  • refund full premiums, all bank fees and interest to customers with high initial lapse rates;
  • refund 50 per cent of premiums and interest to customers with high ongoing lapse rates;
  • offer a sales call review to other eligible consumers and remediate if there is evidence of poor conduct;
  • engage an independent expert to provide independent assurance over the consumer remediation program; and
  • cease selling life insurance directly to consumers (that is, without personal financial advice).
Currently, ASIC is conducting a review of the life insurance industry that will be published in mid-2018.