ASIC’s examination of CommInsure scandal

WHAT DID COMMINSURE DO WRONG?

The corporate watchdog has found the Commonwealth Bank-owned insurer used outdated medical definitions for heart attacks and rheumatoid arthritis in assessing claims – a practice that resulted in the refusal of claims by seriously ill customers.

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It was not illegal but the Australian Securities and Investments Commission said its practices were “clearly out of step with community expectations”.

HOW DO WE KNOW ABOUT IT?

CommInsure’s former chief medical officer filed an unfair dismissal claim in which he said he was fired in August 2015 for whistleblowing. Dr Benjamin Koh claimed that CommInsure used the definitions to deliberately deny legitimate claims and delay others to minimise potential payouts. A joint investigation by Fairfax Media and the ABC’s Four Corners program highlighted affected customers.

HOW DID COMMINSURE RESPOND?

Commonwealth Bank maintained Dr Koh was dismissed for sending confidential material to his personal email account, but chief executive Ian Narev did say he was “saddened and disappointed by the handling” of some cases.

WHAT HAPPENED NEXT?

Mr Narev invited CommInsure customers to ask for their cases to be reviewed and commissioned Deloitte to conduct an independent review, which cleared the bank of systemic failings.

WHO CARRIED THE CAN?

Mr Narev had told a parliamentary committee that no senior executives had been sacked over the matter.

WHAT DID ASIC DO?

ASIC examined 60,000 documents, interviewed staff, reviewed client files and obtained independent medical advice before calling out the outdated definitions. ASIC’s investigation did not extend to concerns raised about treatment of whistleblowers.

WHAT HAPPENS NEXT?

ASIC will work with Comminsure to ensure better communications with consumers as well as improved training and assistance for claims managers. It has asked for an independent expert to assess the insurer in mid-2018, and said it is still examining CommInsure’s advertising and promotion policies over concerns they were misleading or deceptive.

Shareholders want clearer CEO pay reports

The Australian Shareholders’ Association wants companies to disclose how its CEO’s pay compares to that of an average Australian as part of a push for improved reporting of executive remuneration.

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Proxy shareholder groups such as ASA have been encouraging an investor backlash against rising executive pay at large companies, even as lower profits have frequently resulted in a sharp cut in dividends.

Last year, more than 100 ASX listed companies earned a “first strike” – a vote of at least 25 per cent by shareholders – against their remuneration reports.

They are at risk of a potential board spill if they receive a second warning this year.

AGL Energy, Woodside Petroleum and Boral are among the major companies included in that list.

ASA said on Thursday it will urge companies to this year include a table of actual take-home pay in their remuneration report, and also voluntarily disclose a ratio of the CEO’s actual remuneration against average weekly total earnings figures provided by the bureau of statistics.

“Disclosure of a CEO pay ratio provides greater transparency and would enable shareholders to have a better understanding of where a particular CEO’s take-home pay lies relative to the take-home pay of the average Australian,” ASA chief executive Judith Fox said.

The take-home pay for CEOs of the top 200 listed companies is often quite different to the statutory pay declared in annual reports, due to the awarding of rights to shares and long-term bonuses.

ASA will also be asking companies to provide more meaningful disclosure on performance measures and vesting outcomes for short-term incentives.

Another focus area for the group will be fairness in capital raisings, to ensure retail shareholders get adequate time to participate equitably in capital raisings, and they are structured to reduce the extent of dilution of retail share holdings.

It named recent share raisings by Macquarie Atlas Roads and Tassal Group, which set aside allocations of less than 10 per cent and 25 per cent respectively for retail shareholders.

“Companies should offer shareholders the ability to subscribe for up to $15,000 of shares under the share purchase plans, which is the maximum limit allowable under the relevant rules, and not scale back any applications,” Ms Fox said.

Senators told to block childcare overhaul

The childcare sector is so worried about vulnerable children losing access to two days a week of early education it is urging senators to reject an overhaul of subsidies if the Turnbull government does not agree to changes.

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The Senate is debating the government’s childcare plan and a vote is expected on Thursday night.

The sector wants the minimum subsidised care guaranteed to low-income families lifted from 12 to 15 hours a week.

But that looks unlikely to happen after South Australian senator Nick Xenophon and his team decided to support the government’s position.

Under the planned overhaul, childcare subsidies will be rolled into a single means- and activity-tested payment.

Both parents have to work, volunteer or study for at least eight hours a fortnight to get subsidised care.

Early Childhood Australia says with the rise of insecure and irregular work it would not be unusual for a lower-income family to have their shifts reduced for a fortnight.

“You’ve either got to decide to pull your children out of childcare or pay the full cost of childcare with no subsidy for that two weeks,” chief executive Sam Page told AAP.

“When you’re on a combined income of $70,000 and you’ve just lost work, what hope do you have to cover that without a subsidy?”

Senator Xenophon said his team would support the government on the activity test.

“You can extend the activity by reading to your child at the preschool, volunteering, a whole range of matters that will be set out in debate,” he told AAP.

Ms Page said not everybody would be able to volunteer just to keep their kids in care, especially if they were looking for work.

Labor says it is unthinkable to spend $1.6 billion extra on childcare subsidies but leave behind the most vulnerable children.

Government figures show about one in five families earning less than $65,000 a year will lose subsidies because they do not meet the activity test.

“It is not right to punish vulnerable children for the decisions that their parents make,” Labor childcare spokeswoman Kate Ellis said.

“The effects of that would be to lock in welfare dependency for generations.”

But Labor will not say if it will oppose the bill if it cannot secure its changes.

The Greens have said they will oppose the whole package if the minimum hours of subsidised care are not increased.

The government needs support from nine of the 10 crossbenchers.

Derryn Hinch and Liberal Democrat David Leyonhjelm have secured a promise from the government to scrap childcare subsidies for families earning more than $350,000 instead of covering 20 per cent of their fees up to $10,000 a year.

Senator Hinch says will support the government as long as it makes that change but AAP understands Senator Leyonhjelm will not necessarily vote for the bill.

Former Liberal senator Cory Bernardi has signalled he is unlikely to support the childcare package.

Education Minister Simon Birmingham says negotiations are continuing but AAP understands the government is quietly confident of success.

Social Services Minister Christian Porter says the government believes keeping a minimum 12 hours of care strikes the right balance between helping parents who are looking to work more and making the package financially sustainable.

“Failing to support the reforms would mean we fail to focus our resources on the hardest-working families in Australia on the lowest incomes. That is where childcare is critical,” he told parliament.

The legislation includes protections for people who work irregular shifts so their activity test would be based on average hours worked over three months instead of the actual hours each fortnight.

CommInsure ‘out of step with expectations’

The corporate watchdog has cleared CommInsure of allegations its managers pressured doctors to alter medical opinions so it could deny life insurance claims but says some practices were “clearly out of step with community expectations”.

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A near year-long investigation by the Australian Securities and Investments Commission found no evidence to support allegations by CommInsure’s former chief medical officer that doctors were pressured, or that documents had been altered or removed with the aim of manipulating claim outcomes.

However ASIC said on Thursday it had identified areas in which the Commonwealth Bank-owned insurer needed to improve and said it is still looking at whether advertising promoting heart attack cover misled consumers.

ASIC said CommInsure, unlike a majority of its peers, had relied on outdated medical definitions when assessing claims related to heart attacks and to severe rheumatoid arthritis.

“Although this is not against the law, it is clearly out of step with community expectations, given that consumers cannot be expected to know whether a medical definition is already outdated when they purchase life insurance,” ASIC said in a statement.

A life insurance industry code of conduct, announced in October and which comes into force on July 1, will require insurers to review medical definitions for current products at least every three years.

“The life insurance industry as a whole needs to lift its game,” ASIC deputy commissioner Peter Kell told reporters.

CommInsure had already agreed to apply an updated heart attack definition back to May 2014 and is now extending that back to October 2012.

It has so far paid a total $2.5 million to 17 customers, based on the changed definition and will work to identify other cases.

“We always know we can do more,” CommInsure said.

Commonwealth Bank chief executive Ian Narev – who sat next to chairman David Turner in 2015 when Mr Turner said the lender was aiming to be known as Australia’s ethical bank – has previously said he was “saddened and disappointed by the handling” of some cases.

He also confirmed to a parliamentary inquiry that no senior executive was fired over the issue.

The regulator said it will work with Comminsure to improve the insurer’s communication with consumers and training for claims managers, with an independent review due for mid-2018.

ASIC reviewed 60,000 documents and interviewed 10 doctors including Benjamin Koh, the former CommInsure chief medical officer who says he was dismissed for raising the alarm over deliberately delayed or unfairly dismissed claims.

CommInsure maintains it fired Dr Koh, who is still engaged in legal action over his dismissal, for sending confidential material to his personal email account.

ASIC’s investigation did not look at the treatment of whistleblowers because that falls under the purview of the Australian Prudential Regulation Authority.

ASIC wants laws changed to allow it to take action on conduct such as incentives for claims staff that conflict with the insurer’s obligation to assess claims on their merit, and also the removal of an exemption for insurance in unfair contract terms legislation.

Labor states unite against penalty cuts

Two Labor state governments and the NSW opposition say there is no way proposed penalty rate cuts can be phased in without hurting low-paid workers.

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The Fair Work Commission has set a deadline of 4pm AEDT on Friday for submissions to the implementation of its decision to reduce the penalty rates of modern award workers in the retail, hospitality, fast food and pharmacy sectors.

The commission wants advice on how the transition to the new rates can be made while minimising the hardship for affected workers.

NSW Labor leader Luke Foley wrote in his submission, released on Thursday, there was no conceivable process that would protect the take-home pay of workers under the awards or future employees.

Mr Foley said it was not possible to prevent the penalty rate cuts from being used by employers in future bargaining to reduce workers’ take-home pay and ensure modern awards are a guaranteed minimum safety-net of take-home pay.

“Instead of determining how this decision should be implemented, I invite the full bench to reconsider the decision altogether,” Mr Foley wrote.

Mr Foley noted women constitute 57 per cent of take-away food workers, 62 per cent of retail workers, 57 per cent of hospitality workers and 85 per cent of pharmacy and cosmetics retailers.

“The penalty rate cuts will significantly and adversely impact those workers who can least afford it and the decision will disproportionately impact women workers.”

In a brief submission, the Victorian Labor government said it maintained its opposition to any reductions in penalty rates.

“On that basis, we do not intend to make any submissions in relation to possible transitional arrangements,” the submission says.

A Victorian parliamentary inquiry into penalty rates and fair pay will report by September.

The South Australian Labor government said the commission should not be considering a transition period or start date for the penalty rate cuts.

“It should reconsider its decision and restore previous rates paid to workers who need it the most,” Deputy Premier John Rau wrote.

Federal Labor leader Bill Shorten asked the prime minister in parliament on Thursday whether the government would be lodging a submission in support of the cuts.

“The Fair Work Commission is bringing Sunday rates closer to Saturday rates because they have been satisfied, after a huge inquiry, that it will create more jobs, more opportunities for small businesses to remain open on weekends, create greater opportunities for employment,” Mr Turnbull said.

“We’re backing small business and so should Labor.”

Meanwhile, former Australian Chamber of Commerce and Industry chief Peter Anderson and Corrs Chambers Westgarth partner Alan Colman have been appointed deputy presidents of the FWC.

Former National Farmers’ Federation legal affairs general manager Sarah McKinnon will be a commissioner, Employment Minister Michaelia Cash said on Thursday.

Sigma considers online Asian expansion

Drugs distributor and pharmacy services firm Sigma Pharmaceuticals will expand its Chinese online business to Hong Kong and is considering further growth in Asia.

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Sales through the Chinese Amcal pharmacy website have been “many millions of dollars” above expectations, chief executive Mark Hooper said.

“While that’s been mainly focused on mainland China, we will push that into Hong Kong,” he said.

“We are starting to think about whether this might be a model we can roll out elsewhere.”

Sigma launched the website in mid-2016, partnering with Chinese marketing and e-commerce company Azoya to aggregate orders and deliver its products.

Sigma made a net profit of $53.2 million in the year to January 31, up five per cent on the prior year.

Revenue rose 26 per cent, partly due to sales of hepatitis C drugs after they were listed on the Pharmaceutical Benefits Scheme (PBS) in March 2016.

Hepatitis C drug sales accounted for about 15 per cent of Sigma’s total sales, and Mr Hooper said revenue from those drugs is likely to ease over the next 12 months.

“The overseas experience with Hep C drugs is that it peaks about 12 to 18 months in, and then it tails off,” he said.

Sigma said its supply of pharmaceuticals to hospitals continues to build, with a 20 per cent market share in Victoria, more than 30 hospitals now trading with Sigma in NSW, and the company set to push into Western Australia.

Sigma confirmed that it expects at least five per cent growth in underlying earnings in 2016/17, after achieving 12 per cent growth in 2015/16.

The company will also extend a share buyback scheme to include a further 10 per cent of shares on issue.

Sigma shares gained three cents to $1.23.

HEP C DRUGS HELP BOOST SIGMA’S PROFIT

* Full-year net profit up 5.3pct to $53.2m

* Revenue up 26.2pct to $4.4bn

* Final dividend steady at 3 cents, fully franked

Black Lung committee to draft legislation

The parliamentary committee investigating black lung disease in Queensland coal mine workers has been granted sweeping power to draft its own legislation, as well as having its brief expanded to include tunnel workers.

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The Coal Workers’ Pneumoconiosis Select Committee handed down its interim report on Wednesday, calling for its terms of reference to be expanded to include workers on Brisbane’s numerous tunnel projects.

It’s believed they may be at risk of suffering silicosis, a similar disease to black lung.

Committee chair Jo-Ann Miller successfully moved the motion in state parliament on Thursday, with the reporting date for the final report now pushed back to May as a result.

As part of the motion, the committee was also granted the power to draft its own legislation.

Ms Miller read out a request from mining union the CFMEU pointing out the department of mines – which has been slammed in the interim report – would be the same department drafting legislation in response to the final report.

She said the committee was well-placed to draw up new laws.

“To date we have received almost 50 submissions and counting. We’ve heard hundred of hours of testimony, and gone through 10,000 documents, all of which paint and illuminating and often disturbing picture,” Ms Miller told parliament.

Current Mines Minister Dr Anthony Lynham spoke in favour of the motion, but pointed out the government had not been idle in dealing with the problem of black lung.

“Black lung does not belong in the 21st century, and this government has thrown the kitchen sink at the issue,” Dr Lynham said

The measures already implemented include ensuring all mine workers have chest X-rays at the start of their careers, and at regular intervals after that, as well as tightening the reporting framework for mining companies.

Dr Lynham also said five thousand chest X-rays had been sent to the United States for specialist assessment, with plans in place to assess those X-rays in Queensland by July.

Rob Millner puzzled by market’s outlook

Experienced businessman Rob Millner is struggling to predict what’s ahead for the Australian share market, given the rare trading conditions following the surprise election of US President Donald Trump.

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“I think we’re like a lot of people, people aren’t sure which way the market’s going to go,” said Mr Millner, who has been a director for more than 30 years and is chairman of Washington H Soul Pattinson, building materials maker Brickworks and miner New Hope.

“It’s certainly had a very good run up, yet days like yesterday it was down 90 points.”

The local market has risen nine per cent since President Trump’s election in November, buoyed by his promises of infrastructure spending and tax reforms.

Australian miners have also been boosted by rising iron ore prices, to around $US90 a tonne, well above what many investors had predicted.

But concerns about delays to the passage of President Trump’s healthcare legislation through congress have rattled equity markets in recent days, wiping $26 billion from the Australian market on Wednesday alone.

Investors are concerned other aspects of the president’s agenda will also be held up by congress.

“We’re not in unchartered waters but we’re in conditions that we don’t experience very often, and obviously the talk over in America is increased interest rates,” Mr Millner said.

He was speaking after Soul Pattinson reported a 56 per cent rise in net profit in the six months to January 31, to $149 million.

The group received higher contributions from six of its seven major investments, most notably New Hope, due to a recovery in coal prices and its acquisition of an interest in the Bengalla coal mine in NSW.

Internet provider TPG Telecom and building products maker Brickworks also delivered improved returns.

“The earnings growth and performance across the portfolio has been extremely strong over the first half and we expect most of our investments to carry this performance through for the full year,” Managing director Todd Barlow said.

The group is always on the hunt for “good quality investments at attractive prices”, he added.

Soul Pattinson has bought stakes in financial services firms Pengana Capital, Hunter Hall Global Value and Hunter Hall International in the past six months.

The group’s financial performance was well received by investors, with Soul Pattinson shares up 68 cents, or 4.1 per cent, to $17.41.

SOUL PATTINSON’S PROFIT SURGES

* Half-year net profit up 56 pct to $149m

* Revenue up 61 pct to $438m

* Interim dividend up 1 cent to 22 cents

World leaders react strongly to British attack

Striking at the heart of Britain.

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That is British Prime Minister Theresa May’s description of the attack in London, a city she says is a city for all nationalities, religions and cultures.

It is a city, she says, that celebrates the values of liberty, democracy and freedom of speech.

Ms May says the area near the British parliament was targeted for a reason but such people will continue to fail in their objective.

“Let me make it clear today, as I have had cause to do before: Any attempt to defeat those values through violence and terror is doomed to failure.”

No Australians are believed to have been killed or injured in the attack.

But Prime Minister Malcolm Turnbull says Australia stands in solidarity with the people of Britain and the police presence at Parliament House in Canberra will now be increased.

He says the attack is also a reminder of the risk police forces, intelligence services and the men and women of the Australian Defence Force face every day in protecting the nation.

Mr Turnbull is urging Australians to remain confident in their country’s counterterrorism measures.

“We will never let them intimidate us or challenge our democratic way of life, or the freedoms for which generations of Australians have served and died to keep secure. The challenge that we face here in Australia is, as I said, a very real one, but we have the finest security agencies in the world.”

Security agencies have reportedly disrupted 12 planned attacks on Australian soil since September 2014.

But Foreign Minister Julie Bishop, attending international talks in Washington on the fight against the self-proclaimed Islamic State, admits it is hard to detect individual, or so-called lone wolf, attacks.

She notes, without jumping to conclusions, the use of a vehicle in the London attack is similar to attacks inspired by IS, or ISIS, in Brussels, Paris and Nice

“It certainly has the hallmarks of some of the recent ISIS-inspired terrorist attacks that we have seen elsewhere, but it’s too early for any conclusion to made on that point.”

United States president Donald Trump, in a call to Theresa May, has offered his condolences and pledged the full cooperation and support of the US government.

White House spokesman Sean Spicer has reiterated the President’s message.

“We applaud the quick response that the British police and their first responders made to the situation. The victims in this are in our thoughts and our prayers. The city of London and Her Majesty’s government have the full support of the US government in responding to the attack and bringing to justice those who are responsible.”

Three French schoolchildren were hurt in the attack.

French president Francois Hollande says France, which has been hit hard by such attacks, knows what the British people are experiencing.

He says Europe must do more to counter the threat.

“We must provide all the conditions to respond to these attacks, which is what we’ve been doing for several months here in France and what I’ve been calling for on the European front. We can clearly see that, on the European level and beyond that, we have to organise ourselves.”

The attack came on the same day European Union officials were commemorating the first anniversary of the bombings at Brussels’ Zaventem Airport and Maelbeek metro station.

Those attacks killed 32 people and wounded hundreds.

European Commission president Jean-Claude Juncker was at a memorial service for those killed in Brussels when he heard what had happened in London.

So, Im really highly emotional today. And the fact that, exactly the same day, something similar happened in London and to London is really putting me in a situation of someone who has a language that doesn t have the words enough to express what Im deeply feeling.

Britain is on its second-highest alert level of “severe,” meaning an attack by militants is considered highly likely.

Australia’s terrorism threat level remains at “probable,” and the Department of Foreign Affairs and Trade advises Australians in Britain to “exercise normal safety precautions.”

 

 

Dead and injured in British ‘terrorist attack’

The attack in London appears to have unfolded over several locations, including on Westminster Bridge, where witnesses say a car crashed into pedestrians.

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It all climaxed with loud bangs heard inside parliament, and, shortly afterward, two more bodies were seen lying on the ground in a courtyard just outside.

Along with those killed, at least 40 more people were injured on the bridge, where people lay on the ground, some bleeding heavily and one under a bus.

London’s acting deputy police commissioner, Mark Rowley, quickly announced English police had declared the situation a terrorist attack.

“Parliament has been locked down, and the Met responded in line with our plans for a marauding terrorist attack. That response included uniformed and specialist firearms officers. We now, of course, have an ongoing operation, and, whilst we currently believe there was only one attacker, I am sure the public will understand us taking every precaution in locking down and searching the area as thoroughly and exhaustively as possible.”

Witness Rob Lyon has described what he saw on the bridge.

“I heard a big sort of crunch – sounded like a car crash, but then almost that crunch of a wheel on a kerb. Then I saw the vehicle mount the kerb, and it was coming at us so quickly. I saw some people be hit in front of me. James, who I was with, he sort of shouted, ‘Get out the way,’ I think it happened so quickly. And I jumped to the left into the road. I think one of the guys had been hit. And, fortunately, it went past me. And then, (I) looked around me in shock, because I could see bodies and people and it was all a real shock.”

Another witness says he watched as the car zigzagged through a street near Britain’s parliament.

“Up to now, inside, outside, I’m feeling sick, and I don’t know what’s happening. I don’t know who’s that person, is it a sick person or a terrorist, I don’t know exactly who is that person. At the moment, though, eyewitnessing it is not something I’d wish for anybody.”

Another witness says police moved swiftly to contain the situation.

“Police were ushering people out of the Tube station very quickly. I was ushered onto Westminster Bridge. But then I looked across the west pavement, and there were bodies, people, lying on the bridge, being tended to. So then I moved up into the middle of the bridge, looked further down the south side of the bridge, it was clear there were also bodies, people, lying on the floor on the western pavement.”

Britain’s House of Commons, in session at the time, was suspended, and MPs were asked to stay inside.

The attacker was inside the gates of parliament when he was shot.

British prime minister Theresa May was immediately ushered to safety and kept updated on the situation.

British interior minister Amber Rudd says the government’s top priority now is people’s security.

“I urge everyone to remain calm, but to be vigilant. And if they see anything they are concerned about, they should report it to the police. We have the best police, the best security services, in the world, and we must make sure that we let them get on with doing their job.”

The incident has happened on the first anniversary of the attacks that killed 32 people in Brussels.

It is the deadliest attack in London since four British militants killed 52 commuters and themselves in suicide bombings on the city’s transport system in 2005.