Civil penalty proceedings in the Federal Court have been initiated by the Australian Securities & Investments Commission (ASIC) against MLC Limited over the latter’s supposed insurance policy and service failures.
ASIC – which is seeking declarations, pecuniary penalties, and other relief – believes the company breached its obligations as a financial services provider and its duty to act with the utmost good faith when handling claims from 1999 to November 2020.
MLC Limited is accused of failing to pay a rehabilitation bonus benefit to 297 customers; timely update its definition of severe rheumatoid arthritis, resulting in 12 policyholders being denied insurance cover; notify more than 800 customers that their premiums had increased or were overdue, or that their insurance policies had been cancelled or lapsed; and fully refund premiums to over 260,000 people who had cancelled their loan insurance policies or paid out their loans.
“Consumers should be able to trust insurers to pay their full benefit in times of need and keep them informed about significant changes to their policies,” said ASIC deputy chair Sarah Court. “This case alleges failures by MLC, over many years, to ensure a reliable delivery of basic and everyday insurance services.
“Insurers need to make sure they have adequate systems and controls to manage risk and administer their insurance policies correctly. Too often, we are seeing consumers harmed by implementation issues, legacy IT systems, and failures resulting from poor governance and culture. ASIC will look to take enforcement action to ensure these systems improve.”
According to the regulator, the alleged failings resulted in financial harm worth more than $17.5 million. It added that MLC Limited has advised ASIC that impacted customers have been remediated.
MLC Limited, which uses the MLC brand under licence, is part of the Nippon Life Insurance Group.