Commonwealth Bank has been forced to defend itself against politicians’ criticisms of a Deloitte review of CommInsure’s claims-handling practices.

The bank responded last week after Shadow Assistant Treasurer Matt Thistlethwaite claimed the report was set up to produce a favourable outcome.

“The cases that were reviewed were broadly broken down into two categories: total and permanent disability (TPD) and death claims,” he said at a House of Representatives hearing into the four major banks.

“Of the TPD claims, 217 of 2172 were reviewed, which equates to about 10%. But 98% of death claims were reviewed.

“It… is well known in the industry that TPD claims have a high denial rate,” he told a Commonwealth Bank delegation led by CEO Ian Narev. “You reviewed only 10% of those.

“Death claims are the least disputed area of claims, for obvious reasons, but you reviewed 98% of those. That is not a fair report, is it, given that you have basically stacked the figures to ensure that the outcome was favourable to your organisation?”

But Mr Narev said an examination by the Australian Prudential Regulation Authority (APRA) had cleared the review.

“We have a regulator that is completely independent, which has described the report as independent and robust.”

Mr Thistlethwaite said the committee will ask APRA about the report in due course.

“Do not worry about APRA, Mr Narev – they will get their two bob’s worth from the committee as well,” he said. “How can you say that it is robust, given that the sample is 10% for one area where there is a well-known high denial rate, and 98% for the other?

“Couldn’t you have at least made at 50-50?”

Mr Narev insisted the report was independent, but Mr Thistlethwaite responded: “That is the thing about all these things that you do – you find someone that you say is independent to hide behind.

“You find an organisation to hide behind to back you up. You claim legal privilege on documents that would otherwise prove cases against you. It is more of this cover-up. It is the case that nothing has changed.”

Westpac’s life insurance business also faced scrutiny from Mr Thistlethwaite, citing BT’s high rejection rate for TPD claims in a recent Australian Securities and Investments Commission report.

But bank CEO Brian Hartzer pointed to issues with how the data was collected.

“The issue you [Mr Thistlethwaite] allude to around TPD was an example where you had apples and oranges comparisons, and we had included things in our number that others had not,” Mr Hartzer said.

“I would point out that we think real comparability is important and that needs to extend to the definitions. It is a relatively small product. There were 57 claims we reported there.

“Of those, a number of them were people who did not have the product with us but we counted that as a rejected claim, just because somebody made a claim and then we found out they did not actually have the insurance.”

Mr Hartzer says BT reviewed those claims “because obviously we were pretty upset to hear that was potentially an issue. I think we made a change in one case of those claims after reviewing it. More than 90% of claims are paid out by BT Insurance.”