Scandal continues to dog insurer
I work with ten different insurance companies so I regularly review what they offer and what I choose to recommend. About six years ago I started to have a bad feeling about CommInsure. There was no visible reason for that niggle but I trusted it and scaled down my involvement with them. It now appears my action was the right decision at the right time. This year, Four Corner and Fairfax Media exposed evidence of highly unethical practices carried out by the Life Insurance arm of the Commonwealth Bank. The papers continue to be full of this growing scandal and ASIC (the Government regulator) is investigating. What went wrong at CommInsure?
CommInsure is owned by the Commonwealth Bank and some time ago all major banks and the Commonwealth Bank in particular had the bright idea to make all their tellers and, in fact all their branch staff, into salespeople. The Commonwealth Bank's financial returns have been brilliant, they made their shareholders pots of money but they ran down a precious commodity to achieve this: Their staff's goodwill.
All four major banks and AMP have created a major problem in financial services by calling their salespeople "financial advisers". However, the Commonwealth Bank has the most exhausted employees, hence the largest number of discovered scandals, and it showed up most strongly at CommInsure because tired, profit oriented employees caused the most harm. It is simple really, if you go for the short term money, eventually something will break. CommInsure is now the favourite punching ball of the press and their reputation is affecting the entire Commonwealth Bank. Whenever I go to a Commonwealth Bank branch - they still have good home loans and their technology is great but their staff look more and more exhausted. They are very eager and willing to help and are amazing to deal with when you are buying something but I have often seen them almost dropping with tiredness. If you push your staff too far, if you run down their reserves, you can make a lot of money but eventually your harmful actions catch up with you. Exhausted staff are driven to focus on meeting target and profits, and in those circumstances it is very hard to also take care of ethical obligations.