An Australian health insurance giant has been slapped with a $750,000 fine after claiming it could deny coverage to those with pre-existing health conditions.
The HCF Life insurance term stated coverage could be denied if a doctor later formed the view that symptoms or signs of the condition existed before the customer signed the contract.
Justice Ian Jackman agreed with claims from the Australian Securities and Investments Commission that HCF was prevented from making such a term under the Insurance Contracts Act.
"The contravening conduct should be regarded as objectively serious," he said while delivering the judgment on Thursday.
But there was no evidence the not-for-profit organisation intended to breach the act, Justice Jackman said.
"Nor has ASIC demonstrated more than a theoretical risk of harm to consumers," he said.
Justice Jackman accepted that HCF intended to make its contract term clearer for policyholders to understand.
"While that desire miscarried as matters transpired, the intention of HCF Life was, in itself, a commendable one," he said.
There was also no evidence HCF Life benefited financially from the contraventions, Justice Jackman found.
"Insurance products were presented as less desirable than they actually were," he said.
In response to the Federal Court's findings, HCF Life issued a statement accepting the pre-existing condition in its Recover Cover products were liable to mislead the public.
"We apologise for any confusion that this may have caused and are committed to supporting our policyholders," the insurer said.
The insurer said it has published corrective information on its website and issued notices to affected current and former policyholders.
Along with the $750,000 fine, Justice Jackman ordered HCF Life to publish a corrective notice explaining its breach of the act.
ASIC has been contacted for comment.
