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Lawyers call for reform in the insurance sector

8th Mar 2016

Justice demands that clients facing terminal or chronic illness whose insurance claims have been unfairly denied deserve an inquiry into the insurance sector, investigating alleged systemic poor behaviour by insurers, the Australian Lawyers Alliance (ALA) said today.

A media investigation into the insurance sector has alleged that insurers are avoiding payout commitments to their clients through the use of definition changes, avoidance clauses and delays and disputation of claims.

ALA National President Greg Phelps said that this alleged behaviour warranted further scrutiny and called for an Inquiry with the powers of a Royal Commission to call witnesses, take evidence and particularly to pursue and procure key documents to uncover such poor behaviour. 

“For any insurance company to allegedly deny valid total permanent disability (TPD) claims, especially to terminally-ill clients, for any reason is absolutely unacceptable,” Mr Phelps said.

 “People facing terminal or chronic illnesses are extremely vulnerable and deserve all the support they can get.”

“As lawyers we work every day to get a fair deal for all Australians and their families. Typically we see insurers and superannuation funds working to get a fair and expedient outcome for their clients.

“Unfortunately we also see too many instances where insurers use definition changes, avoidance clauses and delays and disputation as a means of avoiding their responsibilities,” Mr Phelps said.

“There is an urgent need to review the law around insurance policies, to ensure claimants are treated fairly when they need it most - when they are faced with terminal or chronic illness].”

“We are calling for an Inquiry with the powers of a Royal Commission to call witnesses, take evidence and particularly to pursue and procure key documents to uncover such poor behaviour,” Mr Phelps said.

Mr Phelps said the Australian Lawyers Alliance is calling for a three-part reform in the insurance sector, and particularly for total permanent disability claims.

These reforms are based on:

• identifying bad behaviour and calling it out;
• confirming the minimum standards that insurance policies should meet, particularly in relation to TPD and Death policies provided via superannuation funds; and
• encouraging and ensuring higher standards of behaviour and conduct within the sector.

“To identify any systemic poor behaviour of insurers, such as what we presumably saw on Four Corners, an Inquiry with appropriate resources, time and powers needs to commence immediately. With clients facing terminal and chronic illness, they deserve nothing less,” Mr Phelps said.

Mr Phelps called for an industry code of conduct and behaviour for insurance and superannuation companies to be implemented by 1 March 2017.

The Australian Lawyers Alliance has written to Assistant Treasurer The Hon. Kelly O’Dwyer and Shadow Minister The Hon. Jim Chalmers encouraging the above Inquiry, which should to help shape any reforms and secure the best possible outcome for people who are facing terminal or chronic illnesses and who make TPD claims.