The Federal Court has ordered that HCF Life Insurance Company Pty Limited pay a pecuniary penalty of $750,000 and, as agreed by the parties, make corrective disclosures on its website following the Court鈥檚 finding in October 2024 that a pre-existing condition term in certain HCF Life Insurance policies was liable to mislead the public.
The term was used in four policies issued under HCF Life鈥檚 鈥楻ecover鈥� range of products. HCF Life sent corrective notices to affected consumers prior to the penalty hearing.
ob体育 Deputy Chair Sarah Court said, 鈥渙b体育 brought this case to ensure consumers were not misled about their rights and the extent of their cover by HCF Life鈥檚 pre-existing condition term. The Court鈥檚 findings and penalty handed down should serve as a message to insurers of their responsibility to ensure the information distributed to consumers is accurate and consistent with the law.鈥�
Justice Jackman found that whilst HCF Life had no intention to engage in misleading conduct, 鈥渢he contravening conduct should be regarded as objectively serious.鈥�
Further, his Honour stated that 鈥淚t is also common ground that the conduct involved misrepresentation of the operation of an important exclusion in life insurance policies, and that the misrepresentations were made in [product disclosure statements] which consumers were entitled to regard as reliable documents, containing accurate and sufficient information as to the circumstances in which benefits would be payable.鈥� His Honour also stated that, 鈥渋nsurers are now squarely on notice that contractual terms may mislead consumers if the operation of those terms is modified by, or inconsistent with, provisions of the [Insurance Contracts Act 1984 (Cth)]鈥�.
In October 2024, Justice Jackman dismissed part of ob体育鈥檚 case alleging that the term was an unfair contract term under the Australian Securities and Investments Commission Act 2001 (see 24-237MR Federal Court finds HCF Life contract term was liable to mislead the public).
Background
The term regarding pre-existing conditions appears in product disclosure statements (in substantially identical terms) for the following insurance products issued by HCF Life which are all products offered under HCF Life鈥檚 鈥楻ecover鈥� range of insurance products:
- Cash Back Cover
- Smart Term Insurance
- Income Assist Insurance
- Income Protect Insurance.
ob体育 claimed, and the Court accepted, the term could mislead the public because:
- it purported to allow HCF Life to deny coverage if a customer did not disclose a pre-existing condition before entering the contract, and a medical practitioner subsequently formed an opinion that signs or symptoms of the condition existed prior to the customer entering into the contract, even if a diagnosis had not been made;
- it suggested that HCF Life could deny coverage even if the customer was not aware of the pre-existing condition when entering into the insurance contract and a reasonable person in the circumstances would not have been aware of the condition; and
- section 47 of the Insurance Contacts Act prevents insurers from excluding coverage for non-disclosure of a pre-existing condition where the customer was unaware of the condition when taking out the insurance, and a reasonable person in the circumstances could not be expected to have been aware of the condition.