Introduction
Duties of the committee
1.1 The Parliamentary Joint Committee on Corporations and Financial
Services (the committee) is established by Part 14 of the Australian
Securities and Investments Commission Act 2001 (the ASIC Act). Section 243 of the ASIC Act sets out the
committee's duties as follows:
- to
inquire into, and report to both Houses on:
- activities of ASIC or the Takeovers Panel, or matters connected with
such activities, to which, in the Parliamentary Committee's opinion, the Parliament’s
attention should be directed; or
- the operation of the corporations legislation (other than the excluded
provisions); or
- the operation of any other law of the Commonwealth, or any law of a
State or Territory, that appears to the Parliamentary Committee to affect
significantly the operation of the corporations legislation (other than the
excluded provisions); or
- the operation of any foreign business law, or of any other law of a
foreign country, that appears to the Parliamentary Committee to affect significantly
the operation of the corporations legislation (other than the excluded
provisions); and
- to
examine each annual report that is prepared by a body established by this Act
and of which a copy has been laid before a House, and to report to both Houses
on matters that appear in, or arise out of, that annual report and to which, in
the Parliamentary Committee's opinion, the Parliament's attention should be
directed; and
- to
inquire into any question in connection with its duties that is referred to it
by a House, and to report to that House on that question.
Terms of reference
1.2 On 14 September 2016, the Senate referred an inquiry into the life
insurance industry to the committee for report by 30 June 2017. The
terms of reference are as follows:
- the need for further reform and improved oversight of the life insurance
industry;
- assessment of relative benefits and risks to consumers of the different
elements of the life insurance market, being direct insurance, group insurance
and retail advised insurance;
- whether entities are engaging in unethical practices to avoid meeting
claims;
- the sales practices of life insurers and brokers, including the use of
Approved Product Lists;
- the effectiveness of internal dispute resolution in life insurance;
- the roles of the Australian Securities and Investments Commission and
the Australian Prudential Regulation Authority in reform and oversight of the
industry; and
- any related matters.
Conduct of the inquiry
1.3 The committee advertised the inquiry on its webpage and invited
submissions from a range of relevant stakeholders. The committee set a closing
date for submissions of 18 November 2016.
1.4 On 21 September 2016 the committee resolved to inform
submitters that:
- the committee welcomes individual stories that may identify
widespread issues and recommendations for reform; and
- the committee is not able to investigate or resolve individual
disputes.
Extension of the inquiry
1.5 The committee agreed to seek three extensions to the inquiry reporting
date. On 29 March 2017 the Senate agreed to extend the reporting
date to 31 October 2017. On 14 September 2017 the Senate agreed to extend the reporting date
to 7 December 2017. On 15 November 2017 the Senate agreed to extend the reporting date to report by
31 March 2018.
Submissions
1.6 The committee received 77 submissions and a number of supplementary
submissions as detailed in Appendix 1. The committee also received additional
information including answers to questions taken on notice as listed in
Appendix 1.
Hearings
1.7 The committee held the following hearings:
- 22 February 2017 in Melbourne;
- 24 February 2017 in Sydney;
- 03 March 2017 in Canberra;
- 26 May 2017 in Canberra;
- 18 August 2017 in Canberra;
- 8 September 2017 in Canberra; and
- 1 December 2017 in Canberra.
1.8 A list of witnesses who gave evidence at the public hearings is in
Appendix 2.
Structure of this report
1.9 The structure of this report is as follows:
- Chapter 2 provides background on the life insurance industry;
- Chapter 3 considers consumer protections that apply to life
insurance;
- Chapter 4 discusses the life insurance codes of practice;
- Chapter 5 discusses remuneration, commissions, payments and fees;
- Chapter 6 examines retail life insurance and approved product
lists;
- Chapter 7 considers group life insurance;
- Chapter 8 considers the access life insurers have to a customer's
medical information at the time of purchasing a policy and at the time of
making a claim;
- Chapter 9 discusses the use of genetic information in life
insurance; and
- Chapter 10 examines claims handling practices, including the use
of surveillance, and legacy products.
Acknowledgements
1.10 The committee thanks all individuals and organisations who assisted with
the inquiry.
Notes on references
1.11 References and page numbers for the committee Hansard are to the proof
Hansard. Please note that page numbers may vary between the proof and official
transcripts. In the report, the life insurance industry may also be referred to
as 'the industry'.