Insurance
Freedom drops chief, slashes workforce

The chief executive of Freedom Insurance Group has left the company effective immediately and more than half of its workforce is being made redundant.

Chief executive Keith Cohen, who has been at the helm for nearly nine years, will be replaced by chief operating officer Craig Orton, who joined in February.

Chief financial officer and actuary Jenny Andrews will also depart after almost five years with the company.

The departures come as part of a restructure, following a business review.

As at June 2018, Freedom had 229 employees, the majority (165) were call centre sales and customer service staff.

Following the restructure, which was conducted with the help of Deloitte, only 90 employees will remain.

Total restructuring costs, which include redundancy payments, will mount to $4.8 million.

Slashing operating expenses is expected to save Freedom $15 million per annum.

Freedom said the restructure aims to realign its business model to ASIC's comprehensive review and findings of the direct life insurance segment.

ASIC found direct life insurers' sales practices were poor and the products offered little to no value.

Freedom conceded that the upfront commission it earns and existing distribution model will not meet ASIC's proposed new regulatory regime.

Consequently, Freedom's board has decided to suspend new sales of all direct insurance products.

It said 350,000 existing customers will not be affected by the changes and it will continue to receive admin fees and trailing commissions from current in-force policies.

The Royal Commission made a case study out of Freedom during the sixth round, when it was revealed it may have engaged in unconscionable conduct for selling policies to vulnerable customers and a man with Down Syndrome.

The man's father, Grant Stewart, shared how a Freedom salesperson sold the policy to his son and apparently couldn't tell he was disabled. The family had also repeatedly tried to cancel the policy, but with great difficulty.

Just a few days before appearing before the Commission, Orton said the company was undertaking a strategic review.

Read more: ASICFreedom Insurance GroupCraig OrtonGrant StewartJenny AndrewsKeith CohenRoyal Commission
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