A policyholder who argued his life insurer should pay $500,000 for lost investment earnings after overcharging his premiums has lost a case before the Australian Financial Complaints Authority.  

The complainant’s policy with Clearview Life Assurance was set up in 2016 with the wrong date of birth, meaning he was overcharged.  

After discovering the error early last year, the insurer refunded him $89,815 for the premiums and interest.  

But the man said the offer was unfair because he would have invested those funds and the refund did not consider the earnings he would have made.

He said $500,000 was appropriate to cover the lost profits, plus expenses he might incur when amending his tax returns.  

In its decision, AFCA says the wrong date of birth was provided by the policyholder’s adviser and all parties “bear some responsibility for the error being made”.  

It says the overcharge was substantial but there were no guarantees the man would have invested the money.  

It notes the overcharge was paid over seven years and “loss should not be approached on the basis that the complainant would have had a large additional sum of money to invest at the start of the policy were it not for the error”.

AFCA added: “If the error had not occurred, he would have had a relatively small additional amount of money at the time of each premium payment.

“He might have simply used that money for modest increases to his living expenses. Alternatively, he might have invested it.

“The complainant is required to provide persuasive evidence about what he would have done, and provide calculations showing how much better off he would have been had he done that.  

“The complainant has not provided that kind of information. His justification for the claim of $500,000 is vague and not supported by contemporaneous records.”  

The insurer has offered to pay for at least two years of amended tax returns. AFCA says it may need to pay more if the complainant can show more returns need changing.  

The authority also says Clearview Life should reinstate the man’s policy without underwriting if he pays outstanding premiums. The man had wanted the outstanding premiums waived.

Click here for the ruling.