The Commonwealth Bank-owned insurer will pay the money to consumer advisory service Financial Rights Legal Centre, and have its advertising approval process independently reviewed, after ASIC raised concerns about examples of advertising that were misleading.
In particular, claims made about its Simple Life Insurance, which was sold directly to consumers, and its Total Care Plan product, sold through financial advisers, were deemed to have been misleading and deceptive in advertisements running between mid-2013 and March 2016.
According to ASIC, the ads might have led customers to believe they were eligible for a lump sum payment in the event of a heart attack. However, only certain types of heart attacks, with specific medical criteria, were actually covered by the policies.
The action redressed claims dating back to October 2012 after CommInsure updated its definition of a heart attack in trauma life insurance products in March 2016.
So far around $4 million have been paid in additional benefits for 32 claims as a result of the reassessment.
The hefty penalty serves as yet another warning to all businesses to ensure all advertising and marketing communications do not breach the very strict guidelines around misleading consumers.
A number of high-profile businesses, as well as many SMEs, had been caught making claims or undertaking activities which were found to have misled consumers, including electronic retailers selling second-hand goods as new, drug companies profiting from claims about identical products and an accommodation provider found guilty in court of tampering with consumer reviews.
As My Business reported earlier this year, there is no official definition of what constitutes a misleading claim.
However, the ACCC has suggested the accepted definition among the courts and regulators is that a “conduct is misleading when it is capable of leading people into error. The overall impression given by the conduct or a particular claim will be considered in determining whether it is misleading.”