AMP has defended its practice of charging premiums to dead life insurance customers in a submission to the financial services Royal Commission.
The wealth manager continued to deduct life insurance premiums from a deceased customer, even after AMP has been notified of their death, as revealed in the sixth round of the Commission.
According to AMP, it is not inappropriate to charge members life insurance premiums after their death - because the company's policy has always been to refund those premiums upon payment of the customer's life insurance claim.
"It is inevitable and appropriate that premiums will continue to be deducted after a person's death and before AMP is notified of that death," AMP said.
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"AMP has always had a process in place to refund these premiums upon payment of the life insurance claim."
The wealth manager said an issue arose in April this year relating to the manner in which those refunds were calculated and processed for payment, and not whether or not AMP would refund members. AMP added those issues were process errors and rejected suggestions it failed to previously report the error.
AMP also objected to counsel assisting's findings that the wealth manager may have engaged in misconduct by authorising the deduction of premiums from members' accounts where those premiums were calculated on an inappropriate basis.
The wealth manager said it did not assume members who were delinked from a corporate superannuation plan were smokers, saying there is no application of smoker rates.
This is despite AMP group executive wealth solutions and chief customer officer Paul Sainsbury telling the Royal Commission AMP did not act fairly and reasonably with respect to a non-smoking member who was charged $72,000 in excessive premiums when he was unknowingly defaulted as a smoker.
The member had to escalate a matter to the Superannuation Complaints Tribunal.
Upon delinking from a corporate superannuation plan, AMP said a member defaults into either a product using only one set of premium rates that applies to all members or a product using multiple categories and corresponding premium rates. This is otherwise known as a "hybrid" category, it said.
"It is wrong to say that AMP assumes members are smokers or that it applies a smoker rate by default," AMP said.
"Rather, in every scenario, AMP calculates the premiums that it charges to members based on actuarial assessments that reflect the risk for the relevant pool of insureds based on the information available to it."