ASIC - Australian Securities and Investments Commission
ASIC - Australian Securities and Investments Commission
05/19/2023 | Press release | Distributed by Public on 05/18/2023 18:34
23-128MR MLC Life Insurance penalised $10 million for misleading customers and failing to provide benefits
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23-128MR MLC Life Insurance penalised $10 million for misleading customers and failing to provide benefits
The Federal Court has ordered MLC Limited (MLC) pay a $10 million penalty for failing to pay promised benefits, resulting from a lack of appropriate systems to administer its insurance policies.
The Court also made declarations that MLC had contravened the ASIC Act, the Corporations Act and the Insurance Contracts Act for failures to:
- pay a rehabilitation benefit to 119 customers who had undertaken approved rehabilitation programs following injury and/or disability;
- have adequate processes to review and, if appropriate, promptly update its medical definitions for critical illnesses in certain policies; and
- adequately train and monitor staff about communications to customers regarding the administration of their policy, including policy schedules and premium notices.
ASIC Deputy Chair Sarah Court said, 'Customers should be able to trust that their insurer will pay the benefits promised to them and keep them properly informed if there are changes to their policies.
'The failings recognised by the Court are the result of poor governance, poor controls and poor systems, such as legacy IT systems. MLC customers deserve to have their insurance policies administered properly.
'ASIC will continue to take action against insurers who aren't acting in accordance with their duty of utmost good faith towards their customers.'
In addition to the $10 million penalty, MLC has provided approximately $11.8 million in remediation to approximately 1,000 impacted customers.
Justice Moshinsky has also ordered MLC to publish an adverse publicity notice on its website.
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Background
MLC sold life insurance policies providing coverage for income protection, critical illnesses and other personal risks.
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