Insurance giant TAL has quietly sacked 50 staff as it winds back its exposure to direct insurance sales, as the model comes under growing public and regulatory scrutiny.
The Australian Financial Review understands the sackings began last week at a division that sells direct life, income, funeral and pet insurance known as Insuranceline.
Direct insurance is under the gun following a scathing ASIC report which found three out five policies sold were cancelled within three years and evidence of widespread mis selling was uncovered by the Hayne royal commission.
A spokesperson confirmed the redundancies saying there was a “reduction in staffing requirements” as the business focused on “achieving the best possible customer outcomes”.
“A program of change has been underway for some time in line with their strategy for the direct business … The strategy includes a move away from outbound sales channels, which also aligns with recent recommendations from the ASIC Direct review,” the spokesperson said.
TAL’s move to exit the controversial direct insurance space follows Freedom Insurance’s decision to withdraw from the segment and manage the trailing revenues from the policies for cash as it continues to pursue the purchase of life insurance business St Andrews from BOQ.
Among the TAL brands to be affected by the redundancies was Insuranceline. TAL acquired a 10 per cent stake in Insuranceline in 2011 before acquiring the remaining 90 per cent in 2013.
While TAL was not singled out for its direct life activities during the Hayne royal commission’s public hearings on insurance, it suffered reputational damage after it was revealed to have paid a private eye to spy on a claimant’s swimming pool visits.
TAL – which was once listed on the ASX and changed its name from Tower – was acquired by Japanese giant Dai-ichi Life in 2010 for $1.2 billion.