Ten insurers have earned more than $410 million in premiums from accidental death insurance, a product the regulator wants scrapped.
The Australian Securities and Investments Commission has told insurers to stop selling accidental death cover because it offers little benefit to consumers, with only 16 cents paid in claims for every $1 of premium paid.
The banking royal commission has added to the call after gathering information from 10 insurers who together sold more than 131,000 accidental death policies over the last five years.
The insurers have earned more than $410 million in total from premiums over that period.
The biggest earner was the Commonwealth Bank’s CommInsure, which received $121 million in premiums from almost 19,000 policies.
Westpac Life, which no longer sells accidental death cover, earned $103.6 million in premiums on 2178 policies.
Senior counsel assisting the commission Rowena Orr QC said a significant number of the insurers had extremely high claim denial rates.
By far, the most common reason for a claim being denied was that the cause of death was not accidental.
In other cases, claims were denied because drugs or alcohol were involved or it was a suicide.
ClearView denied one claim because the beneficiary murdered the person whose life was insured, the inquiry heard on Wednesday.
Ms Orr said a number of the companies received few or no claims under their policies and a number had stopped selling at least some of their accidental death products.
‘This development may also suggest that entities are recognising that accidental death products have limited value to consumers,’ she said.