Freedom halts life sales, installs new CEO
Beleaguered Freedom Insurance Group has suspended direct sales of all life products as it continues to search for a new business model.
COO Craig Orton, who joined in February, is now CEO following the departure of Keith Cohen. CFO Jenny Andrews will step down at a later date.
The changes are part of a strategic operational review announced last month following an “initial discussion” with the Australian Securities and Investments Commission (ASIC).
“Over the coming months, Freedom will continue to work constructively with its business partners to assess future options for its business model,” the company says in a statement.
“The strategic review also has taken into account discussions with ASIC and critical business partners, and the time and risks associated with any transition.”
Freedom says its existing distribution model, built around upfront commission revenue, will not comply with ASIC’s proposed new regulatory regime.
The company, which describes itself as an “insurance business distributor”, is under fire over the way its call centre staff used high-pressure sales tactics to sign up new customers.
It was one of many case studies examined during the Hayne royal commission hearing into financial misconduct. Evidence produced before the commission showed Freedom sold cover to a 26-year-old man with Down Syndrome who clearly did not understand what he was buying.
Freedom most recently stopped outbound sales calls for term life and trauma insurance.
As part of the ongoing strategic review, Freedom will drastically shrink its staff numbers to 90. It had 229 full-time employees in the last financial year, according to its 2017/18 annual report.
It will continue to service and renew the policies of its existing 350,000 customers.