Backpackers laughed at selling insurance 'legal scam'
BRITISH backpackers flogging exorbitantly priced funeral insurance to indigenous communities referred to their targets as "Abos" and joked about the "legal scam" while raking in thousands of dollars in commissions, a former industry insider claims.
Luke Edwards worked in customer retention at Freedom Insurance, the publicly listed firm that signed up a 26-year-old with Down syndrome, from January 2016 to February 2017.
Before that, he worked for BlueInc Group's Let's Insure brand, which faced the banking royal commission earlier this year over sales of funeral insurance to indigenous customers, including in the heavily disadvantaged Palm Island region.
The 32-year-old told news.com.au he and another staffer "used to joke it was the world's greatest legal scam".
Mr Edwards finally quit when his "soul could no longer deal" with working in an industry that he believed preyed on vulnerable people including pensioners and Centrelink recipients. "It just ate at me," he said.
"The saddest part was the attitude towards (the indigenous community). As an Australian taught by our education system to respect our First Nations peoples, it was pretty disgraceful (to see) the attitude towards them at both companies, truly a second-class citizen kind of thing."
Mr Edwards said roughly 80 per cent of the workforce comprised British backpackers, who persisted in using the racial slur "Abo" despite being told "how offensive the word was" by Australian staff.
He has chosen to speak out on the record after seeing this week's royal commission hearings into the insurance sector.
He has debated for the past two years whether to call the industry watchdog, the Australian Securities and Investments Commission, himself to tell them "everything I know", including agents' names and which sales calls to investigate.
"I honestly feel like the way that industry has gone it almost needs to be burnt to the ground. There's nothing of value in it."
Funeral insurance has been highlighted as an area of concern by the regulator, which in 2015 found the high rates of cancellations showed "problems not only with cost, but the design, marketing and sales" of the products.
In some instances, customers can end up paying tens of thousands of dollars over a long period of time, far in excess of the actual benefit. Others decide against cancelling their policies for fear of losing the benefit - and all of money they have already paid.
The royal commission heard yesterday how Baptist minister Grant Stewart's Down syndrome son was signed up to a $10.60-a-fortnight Freedom Insurance policy, covering accidental death and injury, after being cold-called by a telephone salesman.
Emails revealed how staff at Freedom Insurance were encouraged to "sell, sell, sell" with incentives including cash prizes, trips to Bali and Vespa scooters. One team leader told sales staff to "show me the money", quoting the Tom Cruise film Jerry Maguire.
Freedom Insurance chief operating officer Craig Orton, who apologised to Mr Stewart and his son, agreed that the tactics were "likely to drive highly aggressive and inappropriate sales practices".
"I do," he said. "I think it's absolutely inappropriate. That will not happen under my watch."
Mr Edwards said targeting people with intellectual disabilities was "common" and that Mr Stewart's son was "certainly not the only instance".
"Anyone that didn't have the mental faculties, you were more or less coached around it to just avoid those questions," he said. "Get the consent, get through the call as quickly as possibly and make that sale."
As part of the retention team, it was Mr Edwards' job to "clean up the mess" left by the sales team and stop customers cancelling their policies. "Reading that transcript of that phone call (on Tuesday), I'm guilty of doing very similar practices," he said.
"We were given a target to save 60 per cent of policies. If you didn't do it, you would be put on performance review. Everyone's under heightened pressure. In retention, pretty much every tactic we'd use is to make life as difficult as possible for the person trying to cancel their policy in the hope they would just give up."
Mr Edwards said many customers, enticed by the "first year free" incentive, would take out policies they couldn't afford and either forget or assume that if they didn't pay their premiums the cover would cancel itself.
The "nasty part" was if "someone had set up their policy with their card details and didn't answer their phone after three attempts, staff were under instruction to debit the cost of the missed premiums".
"In quite a few instances this led to people having a significant amount of their pension, wage and Newstart allowance taken without their prior knowledge," he said.
"We would stonewall customers like no tomorrow. We went as far as not ringing people back at times they requested to purposely catch them when they weren't able to answer the call."
Typically, people would attempt to cancel their funeral insurance because they were unable to afford the annual premium increases. Just before he left, Mr Edwards recalls a lot of older people attempting to cancel due to pension changes.
"You'd still be forced to not let an elderly gentleman of 70 cancel his policy even though you know he's on a pension and his policy is over $200 a week," he said. "The premiums are ridiculously high for what they're going to get."
Funeral insurance was "bread and butter" for both companies, he said, with accidental death and accidental injury used as "top-ups". In its review of the direct life insurance sector, ASIC singled out accidental death in particular as providing "little benefit to consumers".
"The way we were trained to sell accidental injury cover was as if it was almost a replacement for WorkCover, but it wasn't. It was a very small, specific list of injuries," Mr Edwards said.
"A lady called in to claim for brain damage. Her son had been beaten in the head with a hammer. They didn't pay out because he still had 35 per cent brain function as opposed to 20 per cent. I cannot think of a single person that would be better off having a policy like this."
Mr Edwards said sales staff were paid a base salary of about $800 a fortnight, but some could earn up to 10 times that in commissions.
Names of the best salespeople were ranked on a noticeboard.
"It was not uncommon each fortnight to see the same three or four names at the top of the commission board with between $6000 and $10,000 next to their names. But you didn't just need commission to make better money, you needed commission to keep your job. If you didn't you were out the door."
Mr Edwards said the targeting of indigenous Australians was "more of an issue" at Let's Insure. "That was possibly the roughest thing that I experienced while I was there," he said.
Mr Edwards also said the business would generate leads via online pop-up ads that he claimed misled customers into thinking they had won an iPhone. Sales teams would then "sift through" the leads to correlate them with postcodes in the Northern Territory and Western Australia with high indigenous populations.
Once they had a phone number belonging to an indigenous person, they would "hound them". "Most people, if they gave a solid enough 'no' you take them off the system," he said.
"Not with them. They would be contacted at least once a week until they just gave in. There were so many cases where they would call back trying to claim, which was a clear demonstration they didn't understand what the policy was about."
In response to emailed questions, BlueInc Group chief risk officer Peter Keller said Mr Edwards claims were "clearly the inaccurate comments of what sounds like a disgruntled former employee".
"Each of the matters referred to in your email are categorically denied," he said.
"At no time has it been the policy of Let's Insure or any of its management to target indigenous communities in the manner alleged, nor have we, or would we ever, condone the practices described in the email including use of derogatory terms to describe any person or part of the population. We reserve all legal rights should you publish such false accusations."
Freedom Insurance said in a statement that the "issues raised" had been "widely canvassed" by the banking royal commission. "Freedom Insurance acknowledges the instances of unacceptable behaviour highlighted by the commission," the statement said.
"For this the board, management and staff of Freedom are deeply sorry. The examples highlighted are not in line with community expectations, our code of conduct or our company values."
Freedom founder and managing director Keith Cohen said the company "did not meet the standards expected of us and that to have any instance of failure to meet our regulatory obligations or community expectations is completely unacceptable".
But Freedom denied targeting indigenous communities. "With respect to the targeting of indigenous communities, Freedom categorically rejects any assertion that this occurred," the statement said.
"Freedom will carefully review the findings and recommendations of the royal commission when they are released."