Commonwealth Bank has sold its life insurance businesses CommInsure Life (Australia) and Sovereign (New Zealand) to AIA for $3.8 billion.

The agreement includes a 20-year partnership with AIA for the provision of life insurance to Commonwealth customers in Australia and New Zealand.

CommInsure Life and Sovereign customers will retain all current policy benefits.

Last year CommInsure faced controversy after media reports it was rejecting customer claims based on outdated medical definitions.

Bank CEO Ian Narev says AIA’s insurance capability and scale, combined with the bank’s distribution, will mean a better experience for customers.

Under the partnership, Commonwealth will continue to earn on the distribution of life and health products.