General insurers have come under fire during the Hayne Royal Commission, which finished its examinations last Friday.
The commission heard insurers Allianz and IAG may have engaged in misconduct, while the Insurance Council of Australia (ICA) was criticised for failing to act against members that breached the insurance code of practice.
In relation to Allianz, Counsel Assisting Rowena Orr said the commission is open to find the company engaged in misconduct via misleading statements published on its website. The failure to report that misleading and deceptive conduct to ASIC and to have a compliance system in place could also amount to misconduct.
Submissions regarding insurers Youi and Suncorp will be presented in writing due to the complexity of material.
Orr said Allianz’s behaviour, which included seeking to manipulate independent reports, fell below community standards, adding that monitoring and supervision remains an issue for the company. According to Orr, Allianz’s culture fails to consider risk and compliance a priority, while the company responds defensively when challenged.
Swann Insurance also came under fire when Counsel Assisting Mark Costello suggested the commission could find the company engaged in misconduct by giving incentives to authorised representatives (ARs) to sell as many add-on policies as possible with no regard to the suitability of those products. Costello also told the commission that parent company IAG failed to properly oversee Swann.
Regarding the ICA, Orr told the commission the council had not applied any sanctions despite the code governance committee determining there were 33 breaches and around 31,000 incidents of self-reporting since July 2014.
In response, ICA CEO Rob Whelan said the council only applied sanctions when breaches are not remedied, resolved or corrected.
While acknowledging its limitations, Whelan told the commission the ICA believes in self-regulation and that the code should not form part of consumer contracts.
A report containing questions arising will be published on Friday 28 September, with the parties involved able to respond by October 1.