Yes, it may sound bizarre but its true that Insurance company, AMP Limited has been charging insurance premium when there has been no longer a life to insure. Hayne Royal commission heard on Monday, 17 September 2018, that AMP was in practice to charge life insurance premiums to deceased and then later refund those premium instead of cutting off the policy once being informed about the death of the client.
In this game of money rotation, AMP has failed to refund around $1 million to its thousands of dead superannuation members who have been charged life insurance premium even after their deaths have come to the company’s notice.
AMP’s group executive of wealth solutions and chief customer officer, Paul Sainsbury told the commission that in April this year, the company discovered that it has deducted premium from some of its members’ account after their death, but that amount has not been refunded yet.
It has been identified that insurer failed to refund its 3124 members who had been charged additional life insurance premium of about $922,000 despite telling the company that the member has died.
Mr Sainsbury said that directly stop charging the premiums on death rather than refunding them could be the one possible way but it is not the best one. On the disclosure of internal documents including complaints filed two years back, Sainsbury said that company has not identified the issues with charging dead people insurance premiums in 2016 claiming that breach was regarding AMP’s inability to refund the premium it charged to dead people and not about charging dead people insurance premiums.
He said he did not believe that other life insurance companies were also charging premiums to dead people. Though the company’s image has been smashed through the law infringements charged by Australian Securities and Investments Commission (ASIC), Australian Prudential Regulation Authority (APRA) and Slater and Gordon, AMP’s stock managed to stay in green.
Despite the revelation of unusual practices undertaken by the insurance company AMP Limited, the stock moved up on ASX. AMP’s daily price change up-streamed 1.911% to trade at $3.200 on 17 September 2018 (8:28 PM AEST). The stock has seen a performance change of -36.44% over the past 12 months.
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