The Federal Court has found that a ‘pre-existing condition’ term in a few HCF Life Insurance policies was liable to be misleading.
This term was used in three contracts under HCF Life’s ‘Recover’ range of insurance products. The insurance products were Cash Back, Smart Term and Income Assist. The term was replaced on 9 November 2023.
ASIC alleged the term could mislead the public for three reasons:
- It could allow HCF Life to deny coverage if a customer did not disclose a pre-existing condition before entering the contract;
- It suggested that HCF Life could deny coverage even if the customer was unaware of the pre-existing condition; and
- Section 47 of the Insurance Contacts Act prevents insurers from excluding coverage for non-disclosure of a pre-existing condition where the customer was unaware of the condition when taking out the insurance.
ASIC will consider the court’s decision and seek penalties for misleading conduct.
In April 2021, the unfair contract terms regime was expanded to include insurance contracts, arising from Recommendation 4.7 of the Hayne royal commission.
