The Australian Securities & Investments Commission (ASIC) reported that the Federal Court ordered HCF Life Insurance Company Pty Limited to pay a pecuniary penalty of AUD 750,000 and to publish corrective disclosures on its website after the Court found that a pre-existing condition term in certain HCF Life policies was liable to mislead the public. The term appeared in product disclosure statements for four policies in HCF Life’s ‘Recover’ range: Cash Back Cover, Smart Term Insurance, Income Assist Insurance and Income Protect Insurance. The Court accepted ASIC’s case that the wording could mislead by suggesting HCF Life could deny cover based on a later medical opinion that signs or symptoms existed before the contract even without a diagnosis, and could deny cover even where the consumer was unaware of the condition and a reasonable person in the circumstances would not have been aware. The judgment also noted that section 47 of the Insurance Contracts Act 1984 limits an insurer’s ability to exclude cover for non-disclosure in those circumstances; Justice Jackman found the conduct objectively serious notwithstanding no intention to mislead, and observed that insurers are on notice that contractual terms may mislead if inconsistent with or modified by the Act. HCF Life had sent corrective notices to affected consumers before the penalty hearing, and the Court order requires corrective disclosure to be made on its website. In October 2024, the Court dismissed the part of ASIC’s case alleging the term was an unfair contract term under the Australian Securities and Investments Commission Act 2001.
Australian Securities & Investments Commission 2025-05-08
Australian Securities & Investments Commission secures Federal Court order fining HCF Life AUD 750,000 for misleading pre-existing condition term
The Federal Court ordered HCF Life Insurance to pay a AUD 750,000 penalty and publish corrective disclosures online after finding a misleading pre-existing condition term in its policies. The term suggested denial of cover based on later medical opinions without a diagnosis, contrary to section 47 of the Insurance Contracts Act 1984. Although HCF Life had sent corrective notices, further online disclosure was mandated. The Court dismissed ASIC's claim of an unfair contract term under the ASIC Act 2001.