Life Insurance Ripoff
Life Insurance Ripoff

‘Grossly overcharged’: Coast lawyer suing insurance giant

A GOLD Coast lawyer is taking on one of the country's biggest insurers, claiming he has been "grossly overcharged" for a life insurance policy that has increased by more than 780 per cent.

Barry van Heerden, 61, a partner at Attwood Marshall Lawyers at Coolangatta, and wife Karin took out a life insurance policy in 2003 with CommInsure after they arrived in Australia from South Africa.

The premiums at that stage were $111 a month for products including trauma and death paying out $100,000 and $200,000 respectively (they have now increased to $100-$149,000 and $200-$249,000).

They are now $984.19 a month, an increase of 786 per cent in 12 years after soaring by double digit figures every year.

A CommInsure spokesman declined to state whether the insurer considered the increases "fair and reasonable", instead saying premiums and benefits increased over time as people grew older.

Attwood Marshall Lawyers partner Barry van Heerden. Picture: Lawrence Pinder
Attwood Marshall Lawyers partner Barry van Heerden. Picture: Lawrence Pinder

Mr van Heerden said when he took out the policy he understood premiums would increase in line with the Consumer Price Index or 5 per cent, whichever was greater.

He has lodged a complaint with the Australian Financial Complaints Authority alleging CommInsure, which is part of Hong Kong life insurer AIA, has overcharged him. He is seeking $51,911 in compensation.

Mr van Heerden said the Commonwealth Bank had insisted he take out the cover when he obtained a mortgage for his property.

 

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He first became aware of the extent of the premium increases last year after he called CommInsure to complain.

He requested a breakdown of the costs and was shocked to discover the percentage increases ranged from 6.5 to 26.3 per cent over a 16-year period.

Mr van Heerden said he was told for the first time that the increases were in line with a "stepped policy", under which premiums increase as a client gets older.

However, he claims he was only ever told about the indexed increases.

He said CommInsure had written to him in 2011 to advise of the stepped policy but it was never explained to him what that meant.

"I have no issues with premiums increasing but more than 700 per cent is bloody ridiculous," he said.

 

Barry van Heerden has filed a complaint with the Australian Financial Complaints Authority seeking compensation in the amount of $51,911 after he says he was
Barry van Heerden has filed a complaint with the Australian Financial Complaints Authority seeking compensation in the amount of $51,911 after he says he was "grossly overcharged" for a life insurance policy by CommInsure. Mr van Heerden's premiums went from $111 a month to $984 a month between 2003 and 2019. Picture: Lawrence Pinder

Mr van Heerden said the premiums were taken from his credit card each month and he had not noticed the extent.

"I didn't check the premiums coming out," he said.

"I should have looked into it earlier.

"To provide me with a contract I would have thought the most important part was the premium I have to pay. In all the paperwork I completed there was no reference to how the policy would increase.

"There was the reference to indexation, that's all."

He said he was a non-smoker in good health who had no pre-existing medical conditions.

Mr van Heerden said AFCA has advised it would issue its decision by March 20.

A CommInsure spokesman said increasing premiums reflected the "underlying risk" held by the insurer as people get older.

"When a customer takes out a retail policy with financial advice, we would expect their adviser to clearly explain the premium structure to them," he said.

"We then write to policyholders every year to advise them of their premiums for the year ahead, and to let them know that they can contact us to discuss or amend their policy terms."

He said CommInsure was happy to talk to Mr and Mrs van Heerden about making the policy more affordable.



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