Freedom Insurance appears to be the Hotel California of the insurance game. You can check out anytime you like, but you can never leave
On Wednesday, senior counsel assisting Rowena Orr, QC, took the company’s chief operating officer, Craig Orton, through the company’s policy cancellation numbers.
In August, Freedom, which makes 85 per cent of its revenue from selling funeral insurance, but also sells life insurance, accidental death and injury insurance and trauma insurance, wrote to the corporate regulator and provided details on its interactions with customers.
The data showed there were 37,584 calls made to cancel policies made in a period of about 12 months. Freedom was able to identify that 28,455 of these calls came from its customers, so it was on this cohort that Orr focused.
Around 75 cent of the calls came from customers who said they either couldn’t afford the cover, or didn’t want it.
Orton was disappointed by the numbers but not completely surprised, given Freedom provides the first 12 months of cover free and some customers will cancel after their free period expires.
But calling up to cancel and actually getting out of a policy were two very different things. Of that 28,455 calls, only 8,118 calls resulted in the caller successfully cancelling the policy.
“Why does Freedom make it so difficult for customers to cancel their policies?” Orr asked Orton.
The beleaguered executive – who mentioned several times that he had only joined the company in March, and had been brought in to start cleaning up with messes exposed by the royal commission – agreed that the company’s retention practices were “too strong”.
On retention calls he had listened to, “the key problem I heard was not taking ‘no’ for an answer on certain calls”.
But Orr dug deeper into Freedom’s retention practices, showing that up until Orton’s recent banning of commissions at the group, retention officers were paid bonuses based on the number of policies they “saved”.
The training provided showed the frankly terrible emotional triggers these retention agents try to use, such as asking the would-be cancellers if they really have alternatives in place to cover the cost of their funeral if the pass away, or if they have alternatives to cover their family if they had an accident.
“That is an intrusive and inappropriate line of question for your retention agents to take isn’t it, Mr Orton?” Orr asked.
She then took Orton back to the evidence of Grant Stewart, a Baptist minister whose son was sold a Freedom funeral protection insurance package despite the fact his son has Down syndrome, is on a disability support pension and has problems with numeracy and literacy.
On receiving a complaint call from Stewart in 2016, a Freedom sales consultant emailed a colleague to review the call to Stewart’s son. The colleague initially responded with a simple “No” but after receiving 25 sad face emojis in reply – yes, Orr counted them – she did deign to review the call.
Despite no major problems being found with the call at the time, the sales consultant is told to ring Stewart, apologise and offer a refund.
Stewart got his call but before he could cancel he was transferred to – you guessed it – the retention team.
Orr argued this retention agent makes a somewhat half-hearted attempt to “save” the policy of Stewart’s son. Orton gave the retention agent “the benefit of the doubt” and said she was trying to calm the situation.
But an instant messenger chat showed how one Freedom sales consultant described Stewart. “Bloody whinger…I don’t know what he expects to get out of it LOL.”
Orton threw himself at the mercy of Orr throughout his evidence, trying desperately to emphasise that he has been brought in to change things, and that the company’s rapid growth was partly to blame for the problems.
“At the core of the company, there is a customer focus,” he claimed. “It just needs to improve, because of the growth.”
But how on earth will that happen?
Freedom has told the ASX its entire business is under review. It will end commissions. It will stop selling many products via its call centres, including life insurance and accidental death insurance.
But the business will continue for now, to flog funeral insurance via its call centres – after all, it’s 85 per cent of it business.
On the evidence seen as the commission, those calls will go to many people who can’t afford that insurance, or don’t want it – and they will struggle to cancel the policies if they are unfortunate enough to be sold them.
Orton claimed Freedom could sell funeral insurance in a way that was “financially viable and legally compliant”.
In the spirit of the Freedom call centre, Chanticleer suggests you imagine the eye-rolling emoji here.