3.2 Evidence

3.2.1First insured heart attack

In the first case examined, the insured took out a life insurance policy in 2000.[1] The policy included cover forheart attacks, as defined in the policy.[2] The insured suffered a heart attack in January 2014, and made a claim under the policy later that month.[3]

The medical definitions in the insured’s policy were updated from time to time.[4] At the time the insured suffered his heart attack, however, CommInsure had not made any substantive changes to the definition ofheart attacksince July 2005 but, in 2013, had changed the title of the relevant definition from ‘Heart attack’ to ‘Heart attack of specified severity’.[5]

In accordance with the medical opinion of one of CommInsure’s medical officers, Dr Carless, CommInsure denied the insured’s claim for a full trauma benefit on the basis of his heart attack, because he did not meet the relevant policy definition.[6] Among other things, the definition required elevation in levels of troponin I above 2.0 mcg/L, but the insured’s levels of troponin I did not rise to that level.[7]

The insured made a complaint to CommInsure in June 2014,[8] but CommInsure did not change its decision.[9]

In March 2016, the ABC’s Four Corners program and Fairfax Media reported on concerns about CommInsure’s life insurance business.[10] Among other things, the reporting raised concerns that the definition ofheart attackin CommInsure’s trauma policies was out of date, and did not reflect developments in medical science.[11]

As a result of these reports, CommInsure decided to bring forward a planned update to itsheart attackdefinition to March 2016.[12] It decided to backdate the application of the new definition to 11 May 2014.[13]

Shortly after the March 2016 media reports, the insured made a complaint to the Financial Ombudsman Service (FOS) about his claim with CommInsure.[14] At that time, a representative of CBA told the insured that the updatedheart attackdefinition did not apply to his claim, which was made in January 2014, because the updated definition only applied from 11 May 2014.[15] Despite this, the representative asked the insured for information to allow his claim to be assessed against the updated definition.[16] Ms Troup acknowledged that this communication was likely to confuse the insured,[17] and raise his hopes about the potential outcome of his claim.[18]

At about this time, CBA asked Dr Carless to provide a further medical opinion about the claim, assessing the claim against both the previous (2013) definition and the new (2016) definition ofheart attack.[19] Dr Carless again concluded that the insured did not meet the 2013 definition, but said that he did satisfy the 2016 definition.[20]

On the basis of this opinion, CBA told FOS that it was still CommInsure’s position that the insured did not meet the 2013 definition ofheart attack, and that it was the 2013 definition that applied to the insured’s claim.[21] CBA also challenged FOS’s jurisdiction to deal with the dispute, on the basis that the dispute related to a matter of commercial judgment for CommInsure.[22] FOS rejected CommInsure’s challenge to its jurisdiction, an action Ms Troup later said was ‘appropriate’.[23]

Despite FOS having considered and rejected the jurisdictional argument, CBA continued to maintain that the dispute was outside FOS’s jurisdiction,[24] and twice challenged that jurisdiction again.[25] Ms Troup acknowledged that this should not have happened, and that CBA should have accepted FOS’s determination as to its jurisdiction.[26] Ms Troup attributed this conduct to a failure to log the decision about FOS’s jurisdiction in CBA’s case management system.[27]

Having rejected CBA’s challenge to its jurisdiction, FOS asked CBA to provide the medical opinion on which it relied to say that the insured did not meet the 2013 definition, and asked CBA to obtain and provide a medical opinion about whether the insured met the 2016 definition. In response to this request, CBA provided the opinion of Dr Carless referred to earlier, but redacted the section of the opinion dealing with the 2016 definition.[28] In its covering email, CBA said that itdecline[d] [FOS’s] request to obtain or provide a medical report to assess whether the Applicant would satisfy the upgraded definition of Heart Attack.[29] Ms Troup accepted that it wasmisleadingfor CBA to convey to FOS that CommInsure did not already have a medical opinion about whether the insured met the 2016 definition.[30] Ms Troup acknowledged that CBA acted inconsistently with FOS’s Terms of Reference and ASIC Regulatory Guide 139 in refusing to provide this information to FOS.[31] She said that this conduct was misguided, and was not a decision that she would have made.[32]

In July 2016, FOS wrote to CBA requesting further information, including information about the decision to backdate the 2016 definition to May 2014.[33] CBA did not provide information about this decision to FOS, because it did not consider it relevant to the dispute.[34] Ms Troup acknowledged that the failure to respond to FOS’s request was a breach of FOS’s Terms of Reference; she accepted that it was notopen or transparent.[35]

In August 2016, more than three months after FOS’s first request, CBA provided Dr Carless’s opinion to FOS in unredacted form.[36] In October 2016, FOS made a recommendation in favour of the insured.[37] CBA rejected that recommendation,[38] but settled the matter with the insured on an ex gratia basis.[39] Ms Troup acknowledged that CommInsure’s handling of the dispute contributed to the delay in resolving the dispute with the insured and affected CBA’s relationship with FOS.[40]

3.2.2Second insured breast cancer

In the second case examined, the Commission heard that the insured took out a life insurance policy in 1996.[41] In March 2016, the insured was diagnosed with breast cancer, and underwent two surgeries to have the cancer removed.[42] Following this, in August 2016, she made a claim under her policy.[43]

At the time the insured made her claim, the definition ofcancerthat applied to her policy had not been updated since November 1998.[44] One of the exclusions from that definition wascarcinoma in situ unless leading to radical breast surgery.[45]

In August 2016, CommInsure denied the insured’s claim[46] on the basis that she had a carcinoma in situ and her treatment did not involveradical breast surgery.[47] CommInsure formed the view that the treatment did not constituteradical breast surgerybecause the insured had not undergone a mastectomy.[48] CommInsure did not explain this in the letter it sent to the insured,[49] and Ms Troup acknowledged that the letter did not provide the insured with an adequate explanation of why her claim had been declined.[50]

The termradical breast surgerywas not defined in the policy.[51] Similarly, the policy did not specify that a mastectomy was required to meet the definition ofradical breast surgery.[52] Ms Troup accepted that the lack of definition ofradical breast surgeryin the policy resulted in confusion for the insured.[53]

The insured and her husband told CommInsure they were not happy with its decision to decline the claim, and in February 2017 they provided CommInsure with further information from the insured’s GP and surgeon. Both medical practitioners said that the treatment the insured had for her breast cancer constitutedradical breast surgery.[54] Despite the views of these two medical practitioners, CommInsure maintained its decision to decline the claim, again on the basis that the insured had not had a mastectomy.[55]

Ms Troup accepted that CommInsure’s decision to decline the claim was unacceptable in circumstances where CommInsure:[56]

  • was relying on a definition of cancer that, at the time, was about 18 years old;
  • imposed limitations on that definition that were not expressed in the policy documents; and
  • did not account for the way in which the insured had been treated by her doctors and the opinion expressed by those doctors.

Ms Troup also acknowledged that CommInsure had breached its duty to act towards the insured with the utmost good faith, by denying her claim in these circumstances.[57]

The insured made a complaint to FOS in April 2017.[58] Ms Troup accepted that CBA’s engagement with FOS in relation to the complaint fell below what the community would expect of it.[59] Specifically, CBA chose not to respond to FOS’s request for information or to seek an extension of time to respond to that request.[60]

Ultimately, FOS made a recommendation in favour of the insured.[61] The insured and CommInsure accepted the recommendation, and CommInsure paid the insured $169,305 plus interest of just under $5,000.[62] Ms Troup acknowledged that FOS made the right decision[63] and that CommInsure’s handling of the claim caused distress to the insured.[64]

3.2.3The decision not to update the ‘heart attack’ definition

Ms Troup also gave evidence about the decisions that CommInsure made in relation to theheart attackdefinition, including decisions about whether to update the definition, and about the date from which the updated definition would be applied.

Ms Troup told the Commission that, between July 2005 and March 2016, CommInsure had considered updating itsheart attackdefinition, but decided not to.[65] Ms Troup accepted that, from at least early 2012, CommInsure knew that its definition ofheart attack:

  • first, did not reflect the definition ofheart attack’ adopted by an international taskforce of medical practitioners as a generally accepted and universally applicable definition. Among other things that description required reference to whether the insured person’s cardiac biomarkers were elevated above the 99th percentile of a normal reference population, rather than above some absolute level;[66]
  • second, depending on the laboratory equipment used, might have required troponin I levels 20 times higher than those required under the universal definition ofheart attack;[67] and
  • third, could discriminate against CommInsure’s female customers, as it was less common for women to reach the troponin I level specified in the definition.[68]

Ms Troup also told the Commission that in 2012, CommInsure’s Chief Medical Officer had expressed the view that he wouldpersonally move to the universal definitionofheart attack.[69]

Ms Troup accepted that CommInsure should have updated its definition ofheart attackin 2012 to reflect the universal definition.[70] Ms Troup acknowledged that the decision by CommInsure not to update the definition ofheart attackin 2012 fell below community standards and expectations.[71]

In 2013, CommInsure amended the title of itsheart attackdefinition to read ‘Heart attack of a specified severity.[72] Ms Troup accepted that, prior to that change, people reading the policy would have assumed that the policy was intended to apply to all heart attacks.[73]

By May 2014, a number of other insurers had updated theirheart attackdefinitions to reflect the universal definition.[74] Ms Troup acknowledged that CommInsure’s failure to update its definition in May 2014 was a commercial misjudgment that had adverse consequences for its policyholders.[75] Ms Troup accepted that this misjudgment was at least in part the result of CommInsure focusing on commercial considerations at the expense of the interests of its customers, or the potential reputational risks to CommInsure.[76] Ms Troup also accepted that the decision not to update the definition in 2014 fell below community standards and expectations.[77]

3.2.4The decision not to backdate the updatedheart attack’ definition to 2012

As mentioned above, when CommInsure decided to update itsheart attackdefinition in March 2016, it decided to backdate the application of that definition to 11 May 2014.[78]

Ms Troup told the Commission that this decision was based upon the date of the last relevant PDS.[79] Ms Troup acknowledged that another reason for choosing this date was that it was in the middle of the period in which CommInsure’s competitors had updated their definitions.[80]

After receiving a letter from ASIC in March 2017, CommInsure decided to backdate the updated definition ofheart attackeven further, to October 2012.[81] In October 2012, the international taskforce of medical practitioners referred to above had published a paper endorsing a universally accepted medical definition of ‘heart attack’ that was different to the definition used by CommInsure.[82] Ms Troup acknowledged that October 2012 was a more appropriate date to which to backdate the definition, and that CommInsure should have settled on this date at the point that it decided that backdating was necessary.[83]

3.2.5ASIC’s investigation and misleading advertising

Ms Troup was asked about the way that CommInsure advertised its trauma policies between December 2012 and March 2016.

In connection with its investigation into CommInsure in 2016, ASIC raised concerns with CommInsure about its advertising of its trauma policies.[84] In particular, ASIC raised concerns that certain web pages and brochures made available by CBA were misleading or deceptive.[85] In essence, ASIC’s concern was that the material was not sufficiently qualified or limited to convey the specific criteria that consumers would need to meet to satisfy theheart attackdefinition.[86]

Ms Troup was asked about two web pages and two brochures made available by CommInsure concerning its trauma policies.[87] She accepted, rightly in my view, that a person reading the documents would have been likely to believe that CommInsure’s trauma policy covered all heart attacks and, of course, as has been seen, that was not the case.[88] Ms Troup accepted that the documents were misleading.[89] CommInsure had not made this acknowledgment prior to the Commission’s hearings.[90]

ASIC did not take any enforcement action against CommInsure for these misleading advertisements. Rather, ASIC and CommInsure reached an agreement under which, among other things, CommInsure would make a voluntary community benefit payment of $300,000, and would commission a compliance review of its advertising sign-off processes and procedures.[91]


[1]Transcript, Helen Troup, 12 September 2018, 5548.

[2]Transcript, Helen Troup, 12 September 2018, 5550.

[3]Transcript, Helen Troup, 12 September 2018, 5552.

[4]Transcript, Helen Troup, 12 September 2018, 5550.

[5]Transcript, Helen Troup, 12 September 2018, 5551.

[6]Transcript, Helen Troup, 12 September 2018, 5555.

[7]Transcript, Helen Troup, 12 September 2018, 5554, 55601.

[8]Transcript, Helen Troup, 12 September 2018, 5555.

[9]Transcript, Helen Troup, 12 September 2018, 5555.

[10]Transcript, Helen Troup, 12 September 2018, 5556.

[11]Transcript, Helen Troup, 12 September 2018, 5556.

[12]Transcript, Helen Troup, 12 September 2018, 5557.

[13]Transcript, Helen Troup, 12 September 2018, 5557.

[14]Transcript, Helen Troup, 12 September 2018, 5557.

[15]Transcript, Helen Troup, 12 September 2018, 5559.

[16]Transcript, Helen Troup, 12 September 2018, 55589.

[17]Transcript, Helen Troup, 12 September 2018, 5559.

[18]Transcript, Helen Troup, 12 September 2018, 5559.

[19]Transcript, Helen Troup, 12 September 2018, 555960.

[20]Transcript, Helen Troup, 12 September 2018, 555960.

[21]Transcript, Helen Troup, 12 September 2018, 5561; Exhibit 6.138, Witness statement of Helen Troup, 28 August 2018, Exhibit HT-27 [CBA.0001.0508.0118 at .0118]

[22]Transcript, Helen Troup, 12 September 2018, 5561.

[23]Transcript, Helen Troup, 12 September 2018, 5561.

[24]Transcript, Helen Troup, 12 September 2018, 5565, 5567.

[25]Transcript, Helen Troup, 12 September 2018, 5561, 5565, 5567.

[26]Transcript, Helen Troup, 12 September 2018, 5565.

[27]Transcript, Helen Troup, 12 September 2018, 5565.

[28]Transcript, Helen Troup, 12 September 2018, 5563–4.

[29]Transcript, Helen Troup, 12 September 2018, 5563.

[30]Transcript, Helen Troup, 12 September 2018, 5564.

[31]Transcript, Helen Troup, 12 September 2018, 5570.

[32]Transcript, Helen Troup, 12 September 2018, 5571.

[33]Transcript, Helen Troup, 12 September 2018, 5566.

[34]Transcript, Helen Troup, 12 September 2018, 5568, 5570.

[35]Transcript, Helen Troup, 12 September 2018, 5570.

[36]Transcript, Helen Troup, 12 September 2018, 5568.

[37]Transcript, Helen Troup, 12 September 2018, 5571.

[38]Transcript, Helen Troup, 12 September 2018, 5571.

[39]Transcript, Helen Troup, 12 September 2018, 5572.

[40]Transcript, Helen Troup, 12 September 2018, 5575.

[41]Transcript, Helen Troup, 13 September 2018, 5638.

[42]Transcript, Helen Troup, 13 September 2018, 5640.

[43]Transcript, Helen Troup, 13 September 2018, 5640.

[44]Transcript, Helen Troup, 13 September 2018, 5639.

[45]Transcript, Helen Troup, 13 September 2018, 5640.

[46]Transcript, Helen Troup, 13 September 2018, 5641.

[47]Transcript, Helen Troup, 13 September 2018, 5641.

[48]Transcript, Helen Troup, 13 September 2018, 5642.

[49]Transcript, Helen Troup, 13 September 2018, 5642.

[50]Transcript, Helen Troup, 13 September 2018, 5642.

[51]Transcript, Helen Troup, 13 September 2018, 5642.

[52]Transcript, Helen Troup, 13 September 2018, 5642–3.

[53]Transcript, Helen Troup, 13 September 2018, 5642.

[54]Transcript, Helen Troup, 13 September 2018, 5644.

[55]Transcript, Helen Troup, 13 September 2018, 5645.

[56]Transcript, Helen Troup, 13 September 2018, 56456.

[57]Transcript, Helen Troup, 13 September 2018, 5646.

[58]Transcript, Helen Troup, 13 September 2018, 5646.

[59]Transcript, Helen Troup, 13 September 2018, 5649.

[60]Transcript, Helen Troup, 13 September 2018, 5649.

[61]Transcript, Helen Troup, 13 September 2018, 5650.

[62]Transcript, Helen Troup, 13 September 2018, 5650.

[63]Transcript, Helen Troup, 13 September 2018, 5650.

[64]Transcript, Helen Troup, 13 September 2018, 5650.

[65]Transcript, Helen Troup, 12 September 2018, 5595.

[66]Transcript, Helen Troup, 12 September 2018, 5596.

[67]Transcript, Helen Troup, 12 September 2018, 5602.

[68]Transcript, Helen Troup, 12 September 2018, 5602.

[69]Transcript, Helen Troup, 12 September 2018, 5602.

[70]Transcript, Helen Troup, 12 September 2018, 5603.

[71]Transcript, Helen Troup, 12 September 2018, 5593.

[72]Transcript, Helen Troup, 12 September 2018, 5604.

[73]Transcript, Helen Troup, 12 September 2018, 5609.

[74]Transcript, Helen Troup, 12 September 2018, 5605.

[75]Transcript, Helen Troup, 12 September 2018, 5605.

[76]Transcript, Helen Troup, 12 September 2018, 5605, 5609.

[77]Transcript, Helen Troup, 12 September 2018, 5594.

[78]Transcript, Helen Troup, 12 September 2018, 5583.

[79]Transcript, Helen Troup, 12 September 2018, 5583.

[80]Transcript, Helen Troup, 12 September 2018, 5584.

[81]Transcript, Helen Troup, 12 September 2018, 5587.

[82]Transcript, Helen Troup, 12 September 2018, 5596.

[83]Transcript, Helen Troup, 12 September 2018, 5589, 5593.

[84]Transcript, Helen Troup, 13 September 2018, 5618.

[85]Transcript, Helen Troup, 13 September 2018, 5618.

[86]Transcript, Helen Troup, 13 September 2018, 5618.

[87]Transcript, Helen Troup, 13 September 2018, 561924.

[88]Transcript, Helen Troup, 13 September 2018, 5620–4.

[89]Transcript, Helen Troup, 13 September 2018, 5621–4.

[90]Transcript, Helen Troup, 13 September 2018, 5631.

[91]Transcript, Helen Troup, 13 September 2018, 5630.

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