Yahoo Finance MLC accused of ‘failures’ costing 260,000 customers $17.5 million
MLC will need to defend itself in court after the Australian Securities and Investment Commission (ASIC) accused the insurer of failing its customers.
ASIC has launched proceedings against MLC for alleged insurance policy and service failures resulting from poor systems and controls.
ASIC claims MLC’s failure to implement appropriate systems and controls resulted in unpaid insurance benefits, premiums being charged without notice and underpaid refunds.
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ASIC alleges MLC’s conduct led to more than $17.5 million in financial harm to more than 260,000 customers.
“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,” ASIC deputy chair Sarah Court said.
“This case alleges failures by MLC - over many years - to ensure a reliable delivery of basic and everyday insurance services.”
Court said insurers needed to make sure they had 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,” she said.
What is being alleged?
This is not a new issue for MLC. ASIC alleges the failures began back in 1999 and continued until last year.
ASIC said that between 1999 and November 2020, MLC failed to:
pay a life insurance benefit, known as a ‘rehabilitation bonus benefit’, to 297 eligible customers who were undergoing rehabilitation following an insured injury or disability
update its definition of ‘severe rheumatoid arthritis’ in a timely way, resulting in 12 customers suffering from severe rheumatoid arthritis being denied insurance cover and MLC having to update the definition in more than 190,000 insurance policies
notify more than 800 customers that their annual premiums had increased, their premiums were overdue, or that their insurance policies had been cancelled or lapsed
fully refund premiums to more than 260,000 customers who had cancelled their loan insurance policies or paid out their loans
ASIC claims MLC has breached its obligations as a financial services provider and its duty to act with “the utmost good faith” when handling claims.
MLC told ASIC it had already paid back all customers impacted by the alleged conduct.
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