Over $100m in remediation secured for Freedom Insurance customers

ASIC has announced that it has secured $102 million for around 83,600 customers who were, or may have been, mis-sold insurance policies over the phone by Freedom Insurance between 2010 and 2018.

The corporate regulator confirmed the news on Wednesday (17 August) and said more is expected to come.

The “harmful sales and retention practices” of Freedom Insurance were revealed in ASIC’s 2018 review of the sale of direct life insurance. In response, ASIC banned unsolicited cold call telephone sales of direct life insurance and consumer credit insurance the following year.

In October last year, ASIC also commenced civil proceedings in Federal Court against former managing director and former quality assurance manager of Freedom Insurance – Keith Cohen and Robert Oayda – where it was alleged Mr Cohen and Mr Oayda were involved in decisions that saw sales agents qualify for overseas holidays if they reached certain targets and a Vespa scooter for the agent who made the most sales.

At the time, ASIC raised concerns that the incentives influenced the sales agents’ conduct and led to a lack of focus on customer needs.

It’s alleged that between November 2017 and October 2018, Mr Cohen was knowingly concerned in or a party to breaches of the conflicted remuneration provisions by Freedom Insurance and the now-liquidated Insurance Network Services Australia involving two separate trips to Bali and a Vespa scooter, and that Mr Oayda was also involved or a party to the Freedom Insurance breaches.

In a statement released this week, ASIC deputy chair Karen Chester said Freedom Insurance used harmful practices to sell funeral, accidental death and life insurance policies to “vulnerable” customers and used unfair retention practices to keep customers in those policies.

“We believe there are thousands of customers that likely remain entitled to a refund but they haven’t come forward to claim it,” Ms Chester said.

“We encourage Freedom Insurance customers from between 2010 to 2018 who believe they were mis-sold a policy, or who tried to cancel their policy without success, to contact their insurers and be assessed for remediation. We have published information on ASIC’s website about the steps customers can take to seek a refund, including the contact details for each insurer.”

AIA Australia, NobleOak Life, Swiss Re Life and Health Australia and ClearView Life Assurance issued the policies distributed by Freedom Insurance.

AIA Australia, NobleOak Life, Swiss Re Life and Health Australia commenced the Freedom Insurance Remediation Program in February 2020 for customers sold policies between October 2010 and October 2018.

ClearView commenced a separate program in June of this year.

Freedom Insurance no longer sells or administers insurance products, with the Freedom Group companies placed into external administration in February 2020 and deregistered.

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.