MLC Life Insurance hit with $10m penalty

Oksana Patron

19 May 2023

The Federal Court has ordered MLC Limited (MLC) to pay a $10 million penalty for misleading customers and failing to provide benefits, resulting from a lack of appropriate systems to administer its insurance policies.

The Court also declared that MLC had contravened the ASIC Act, the Corporations Act and the Insurance Contracts Act for failures to:

• pay a rehabilitation benefit to 119 customers who had undertaken approved rehabilitation programs following injury and/or disability;
• have adequate processes to review and, if appropriate, promptly update its medical definitions for critical illnesses in certain policies; and
• adequately train and monitor staff about communications to customers regarding the administration of their policy, including policy schedules and premium notices.

According to the Australian Securities and Investments Commission (ASIC) Deputy Chair, Sarah Court, the failings recognised by the Court were the result of poor governance, poor controls and poor systems, such as legacy IT systems.

“‘ASIC will continue to take action against insurers who aren’t acting in accordance with their duty of utmost good faith towards their customers,” she said.

In addition to the $10 million penalty, MLC has provided approximately $11.8 million in remediation to approximately 1,000 impacted customers.