Freedom creates compensation pot, weighs future
Freedom Insurance Group will set aside an initial $3-4 million for a customer compensation program after completing its strategic review.
The insurer’s board has also determined there is “no immediate commercially viable option to recommence sales of its life products”.
Freedom, which halted new sales during the review, will “continue to assess alternative business models”.
The company may face a liquidity shortfall in the next year in the absence of commissions from new sales and is considering options to address this, while reducing costs. Freedom recently cut its staff to 90.
Meanwhile, the Australian Securities and Investments Commission (ASIC) has started an investigation into misconduct highlighted during the Hayne royal commission.
And the Bank of Queensland has terminated its agreement to sell St Andrews Insurance to Freedom. It says the decision was taken when it became clear conditions of the sale would not be met within the stipulated time limit.
Freedom opened a strategic review of its business model, undertaken by Deloitte, following a discussion with ASIC. The company was attacked at the royal commission for phone sales of life and funeral covers. It later dumped phone sales for term life and trauma.
CEO Craig Orton has quit the company, citing personal reasons, after being appointed in October. Former CEO Keith Cohen, CFO Jenny Andrews and non-executive directors Katrina Glendinning and David Hancock have also left.