The Federal Court has ordered HCF life insurance Company Pty Limited to pay a $750,000 penalty and make corrective disclosures on its website after finding a pre‑existing condition term in some of its policies was liable to mislead consumers.
The ruling follows Justice Jackman’s October 2024 decision that a term used across four policies in HCF Life’s Recover range was misleading. HCF Life had already issued corrective notices to affected customers ahead of the penalty hearing.
ASIC Deputy Chair Sarah Court said, “ASIC brought this case to ensure consumers were not misled about their rights and the extent of their cover by HCF Life’s pre-existing condition term. The Court’s 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.”
Justice Jackman found that whilst HCF Life had no intention to engage in misleading conduct, “the contravening conduct should be regarded as objectively serious.”
His Honour added, “It 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.” He also stated that, “insurers 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)].”
ASIC alleged, and the Court accepted, that the term could mislead by purporting to allow HCF Life to deny cover if signs or symptoms of a condition existed before a customer entered the contract, even without a diagnosis; by suggesting cover could be denied even if the customer was unaware of the condition and a reasonable person would not have been aware; and despite section 47 of the Insurance Contracts Act preventing exclusions for non‑disclosure in those circumstances.
In October 2024, the Court dismissed ASIC’s separate claim that the term was an unfair contract term under the Australian Securities and Investments Commission Act 2001.
The term appeared in product disclosure statements for four HCF Life Recover products:
– Cash Back Cover
– Smart Term Insurance
– Income Assist Insurance
– Income Protect Insurance
The judgment is available on the Federal Court website.
