Father labelled a ‘whinger’ for complaining when insurance sold to his son, who has Down’s syndrome

Staff working for Freedom Insurance hung up on customers trying to cancel insurance policies, did not like taking no for an answer and still charged premiums after customers tried to cancel policies, the banking royal commission has heard.

A customer consultant working for the company also labelled a father a “bloody whinger” for complaining when insurance was sold to his intellectually disabled son, who has Down’s syndrome. When the father attempted to have his son’s policies cancelled, Freedom staff ridiculed him in instant messenger conversations.

The banking inquiry heard more evidence on Wednesday about the tactics Freedom employed to prevent customers cancelling policies.

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If a customer called the company with plans to cancel, they were passed to “retention officers” who tried to prevent the cancellations, including asking intrusive questions about a customer’s personal situation to make them feel vulnerable about having no insurance. In other cases, they simply hung up on customers.

The royal commission heard Freedom’s retention officers were incentivised with key performance indicators (KPIs), the primary one of which was a “save KPI” – to save a policy from cancellation – and were remunerated with a base salary and commissions.

Craig Orton, Freedom’s chief operating officer, admitted the incentive structure led to poor customer outcomes.

“The key problems that I heard were not taking no for an answer on certain calls,” Orton said on Wednesday.

The commission heard that when Grant Stewart, a Baptist minister, called the company to complain about it selling $100,000 of insurance over the phone to his intellectually disabled son, he was ridiculed in internal communications.

With Orton sitting in the witness box, senior counsel assisting the royal commission, Rowena Orr QC, read emails from Freedom staff in which Stewart was discussed.

Customer service agent #1: “Hi girl. Policy owner’s dad called in angry as he thinks the sales agent took advantage of policy owner who is disabled by selling him funeral cover. Can you see from the sales agent call what actually happened, please?”

Customer service agent #2: “No.”

Orton said that was a “childish” response.

Orr then said: “To which the first customer service agent, speaking of childish, Mr Orton, responded by sending 25 sad face emoticons to the second customer service consultant.”

Orton replied: “What can I say, Ms Orr? It’s 2016 [when this occurred]. I was very disappointed when I saw this. Things are changing. That’s why I’m here … to make some changes like this. That sort of behaviour, it was a young company at the time, is totally inappropriate, particularly given the gravity of the situation.”

The commission heard that the first customer service consultant was eventually instructed to contact Stewart to apologise, and to cancel the policy, but she did not do that.

As a result, Stewart had to call Freedom again a couple of days later to try to cancel the policies.

During that phone call, Stewart was told he was being transferred to the cancellations department but he was passed to a retention officer who tried to prevent him cancelling his son’s policies.

The retention officer, after a lengthy discussion with Stewart in which his son’s policies were finally cancelled, then sent an instant message to a sales agent to say the policies had been cancelled.

The sales consultant replied: “Bloody whinger.”

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When Orton heard the evidence, he said it was “totally inappropriate.”

“There’s not much I can say on this one, apart from say that the people involved have been counselled by me, directly, both verbally and in written format, and it’s totally unacceptable and against the cultural values that I expect from our employees,” he said.

The retention agent then went on to say that it sounded like Stewart was going to take things further.

The sale agent replied: “Ah well. I don’t know what he expects to get out of it. Lol.”

Orton, again, said it was “totally inappropriate”.

Orr said: “This is a fairly damning indictment of the culture at Freedom at this time, is it not, Mr Orton?”

Orton replied: “It doesn’t bode well on Freedom, I agree.”

In the afternoon on Wednesday, the royal commission turned its attention to Commonwealth Bank’s insurance arm, CommInsure.

The commission heard CommInsure knew in 2012 that insurance claims from customers who had heart attacks were being denied because it was using out-of-date medical definitions.



It only updated its definitions after a scandal in 2016 following news reports by the ABC’s Four Corners and Fairfax Media.

CommInsure managing director, Helen Troup, who appeared as a witness on Wednesday, admitted the company was motivated by commercial considerations when it did not update the definition earlier.

She accepted the insurer did not adequately take into account the interests of customers in making the decisions.



The commission heard CommInsure knew in 2012 its definition of a heart attack did not reflect universal definitions.



It was recognised within CommInsure that there were customers diagnosed by doctors as having had a heart attack whose claims were denied because they did not meet the insurer’s definition, the inquiry heard.



Troup described a 2014 decision not to update the heart attack definition as a commercial misjudgment.



She accepted the misjudgment had adverse consequences for CommInsure’s policyholders.



The inquiry heard CommInsure was happy with the outcome of the Australian Securities and Investments Commission’s (Asic) investigation into the scandal.



The regulator cleared CommInsure of allegations its managers pressured doctors to alter medical opinions so it could deny insurance claims but found some practices were clearly out of step with community expectations.



“There were some extremely serious allegations made against CommInsure on the Four Corners program and they were found to be unsubstantiated, and that was a very good outcome for CommInsure,” Troup said.



Asic found CommInsure had not broken the law but there were a number of areas of concern where improvements needed to be made.



Troup said the key allegations went to the heart of a life insurance company, given accusations it was denying claims and mistreating customers.



“Out of all of the allegations, that’s the one that caused me the most concern for myself, my people, my customers.



“And for that to be unsubstantiated was quite significant for us.”



The inquiry heard that about a third of Troup’s short-term bonus was delayed and not paid until the Asic investigation was completed.



The Asic investigation last year concluded CommInsure’s trauma policies had medical definitions that were out of date with prevailing medical practice, specifically for heart attack or severe rheumatoid arthritis.

Australian Associated Press contributed to this report