CBA knew medical definitions were outdated
CommInsure knew its outdated medical definitions meant some heart attack victims missed out on insurance payouts at least four years before a scandal prompted it to act.
The Commonwealth Bank's insurance business ignored its own chief medical officer's advice to update its heart attack definition earlier, admitting it was more focused on commercial considerations than the interests of customers.
CommInsure updated the definition in 2016 amid an investigation into its life insurance business sparked by media reports.
The banking royal commission heard CommInsure knew at least from early 2012 that its definition of a heart attack did not reflect universal definitions.
It was recognised within CommInsure that there were cases where customers were medically diagnosed as having had a heart attack but their claims were denied because they did not meet the insurer's definition.
Documents before the inquiry show its chief medical officer was worried CommInsure's existing definition could discriminate against women and people generally depending on what machine was used by a lab to measure a particular protein.
In 2014, when a number of other insurers had updated their definitions, another CommInsure chief medical officer again recommended a change and warned of legal implications and that its brand reputation may be tarnished if legitimate claims were denied.
CommInsure managing director Helen Troup described the 2014 decision not to update the definition as a commercial misjudgment, agreeing it had adverse consequences for policyholders.
She accepted CommInsure was motivated by commercial considerations when it made decisions not to update the definition and that it did not adequately take into account customers' interests.
Ms Troup said she was happy with the outcome of the Australian Securities and Investments Commission's investigation into the CommInsure scandal.
The regulator cleared CommInsure of allegations its managers had pressured doctors to alter medical opinions so it could deny insurance claims.
ASIC found CommInsure had not broken the law but there were a number of areas of concern where improvements needed to be made.
"There were some extremely serious allegations made against CommInsure on the Four Corners program and they were found to be unsubstantiated, and that was a very good outcome for CommInsure," Ms Troup said on Wednesday.
Ms Troup said the key allegations went to the heart of a life insurance company, given accusations it was denying claims and mistreating customers.
"Out of all of the allegations, that's the one that caused me the most concern for myself, my people, my customers.
"And for that to be unsubstantiated was quite significant for us."
CommInsure used the same definition of a heart attack in trauma policies between 2005 and March 2016.
It initially planned to backdate the updated definition to May 2014 before extending it to October 2012, as ASIC announced its investigation findings last year.
It paid $4.2 million to 33 customers whose claims would have been allowed under the updated definition.
Ms Troup admitted the insurer misled the Financial Ombudsman Service when dealing with a complaint from a man whose claim for a payout over a heart attack was denied under the old definition.
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