Another year and we’re seeing another scandal at one of the big banks. This time it’s Commonwealth Bank. Or we should say Commonwealth Bank are at it again, given their scandal plagued history. This time their CommInsure arm has been exposed through an investigation by 4 Corners and Fairfax reporter Adele Ferguson.
The investigation uncovered CommInsure doctors being pressured to change assessments of clients to save money, to delay payments to terminally ill customers and refusing to honour legitimate claims. These were issues across all types of policies with some income protection customers off work without any income for long periods.
The Commonwealth Bank have of course apologised through CEO Ian Narev, and no surprise, the affected customers’ claims were promptly settled as soon as CommInsure learned they would be appearing in the media and airing their grievances.
This might be some relief for the CommInsure customers now, but needing to make an insurance claim is an incredibly stressful process. An insurance claim usually is made in the aftermath of traumatic news due to an accident or medical diagnosis.
As we’ve said in the past, getting good advice on personal insurance is incredibly important. It ensures insurance coverage is appropriate and tailored to the needs of the policyholder. It’s also important to have the person who gave you the advice being unconflicted and able to go into bat for you if something unfortunate happens and you need to make a claim.
Policies can be incredibly complex and assuming you’re covered without seeking advice to properly interpret policy conditions can be risky, even when you’re not dealing with an aggressive insurer like CommInsure.
Again, at the heart of this matter seems to be a poor culture at the big banks and we’ll all likely end up paying more for it.
It is interesting that the reckless and unethical behaviour of the larger players in the industry always ends up needing Senate inquires and ongoing calls for Royal Commissions. The end point is always more regulation, regulation that raises the costs for everyone within in the industry, but hurts some players more than others.
Specifically, it’s the smaller players who’ve done nothing wrong that end up suffering the most. And when you consider it from banks’ perspective, they can put it down to the cost of doing business and still come out winners.
It’s a perverse situation; the big banks are better able to wear the higher costs that result from their own actions. Those same costs can put their smaller competitors under pressure, sometimes out of business, eventually driving customers back towards the big banks!
This represents general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your personal investment objectives, financial situation and individual needs.
