t was an unusually warm September day in 2014 when James Kessel set out from his home in Wee Waa, in northern New South Wales. Kessel, 46, a diesel mechanic, was heading to Guyra, three hours’ drive away, for a few months of work on tomato-cropping machinery.

Kessel, a former cotton picker, had lived all his life in Wee Waa, a tiny town known as the cotton capital of Australia. He loved tinkering with busted machinery, taking broken things and making them useful again.

When he arrived at his workplace in Guyra, he stepped out of his ute to open the gate and noticed his shoulder was aching. By the time he got back in the ute, the pain was much worse. Soon after, he was out of the ute again, throwing up.

“So I knelt down so I wouldn’t fall down and the heat came over me,” he says. “It was instant. It was like I was cooking.”

Kessel was having a severe heart attack. He staggered to the workshop and found a colleague to drive him to the nearest hospital. Minutes after getting there, his heart stopped.

“I’m looking at the nurses and I’m thinking, I’m finished. I thought, I’m dying here.” Kessel lost consciousness. It would take a defibrillator to bring him back.

eart attack is Australia’s biggest killer, and Kessel was just one of the 55,000 Australians who are struck every year. More than one in 10 of them won’t survive; those who do can face physical and financial challenges for life.

This is why most of us have some form of life insurance, including trauma cover, either through our super fund or bought directly from a life insurance company.

Kessel might have considered himself doubly fortunate. He had miraculously survived the heart attack - “I remember the nurse saying, ‘You’re the luckiest bloke we know’" - and for much of his adult life he had been paying for a trauma policy with CommInsure, which explicitly covered heart attacks and was worth $1 million.

And the reason for this decision says as much about CommInsure – which collects $2.5 billion in insurance premiums from Australians each year – as it does about the wider life insurance sector, an industry that trades on trust and promises but that has found itself under fire from all directions.

CommInsure’s decision on Kessel’s claim hinged on a strict method it uses to define heart attacks – a method that a joint investigation by Fairfax Media and Four Corners has confirmed is now outdated and unfair if used in isolation.

The joint media investigation understands that the bank was aware of this, even as it continued to use the method to assess claims on heart attacks – which account for one-fifth of CommInsure’s trauma claims.

Legitimate heart-attack victims may have been unfairly refused payouts as a result.

Heart attack...
or is it?

CommInsure requires 2 mcg/L of troponin in your blood.

“That’s certainly out of date and not the standard we’d apply now.”

Expert cardiologist
Dr Andrew MacIsaac

ommInsure’s heart attack definition relied on the precise measurement of a substance called troponin, a protein released into the bloodstream when heart tissue is damaged.

According to CommInsure, a person must have at least 2 micrograms per litre of troponin in their blood to be classified as having had a heart attack severe enough to warrant a lump sum payout, as per their trauma policy.

In Kessel’s blood, the concentration of troponin was 0.488 micrograms per litre, well short of the threshold.

And it was on this basis that Kessel’s claim was rejected, as the letter CommInsure sent to him makes clear.

But science has advanced in leaps and bounds since CommInsure wrote its policy. The use of troponin measurements in this way is now regarded by experts as deeply flawed.

This is something Commonwealth Bank chief executive Ian Narev acknowledged in an interview on Friday:

Mr Narev said CommInsure was in the process of reviewing the definition but would not commit to a wider review into the issue.

“My view is that it has taken too long and from the discussions I’ve had with the CommInsure Board, they’re doing something about it,” he said.

“I have not seen the firm numbers …but the preliminary number of overall claims that have been declined is not significant and only a portion would have been declined for those reasons.”

Kessel had no way of knowing the shortcomings in the assessment of his claim.

Instead of the $1 million provided for in his policy, he was offered a $25,000 “partial payment” for the insertion into his heart of stents.

And what James Kessel also didn’t know was that, just days before his claim had been rejected, it had been referred to a high-powered committee inside CommInsure for discussion.

It is understood that within CommInsure there was no dispute that Kessel had suffered a severe heart attack. An email reveals clear internal warnings that rejecting the claim on troponin levels alone was problematic.

“The sole reason the insured does not satisfy the policy terms is due to him not reaching the Troponin I threshold which is not in line with current medical practice,” says the email.

Acting in “utmost good faith” is a legal requirement for insurers in assessing claims. The CommInsure email warned that if the decision was disputed it would attract negative attention by the Financial Ombudsman Service, which handles disputes between financial services companies and consumers.

“We recommend that the committee consider this claim for ex gratia payment and that the committee also discuss the amount to be paid,” says the email.

Experts say CommInsure’s heart definition is not standard medical practice. Andrew MacIsaac, the president of the Cardiac Society of Australia and New Zealand, says it is not possible to diagnose a heart attack based on troponin levels alone.

“The whole situation has to be taken into account,” he says. This includes the patient’s symptoms when they present to hospital and the results of other tests such as an ECG (which records the heart’s electrical activity) and heart imaging. “All these things need to be put together before a diagnosis can be made,” Dr MacIsaac says.

He says a cardiac arrest – such as Kessel’s – is “by any reasonable criteria a serious occurrence”.

“If we’re going to use 2 micrograms per litre as our threshold for diagnosing a heart attack - that’s certainly out of date and not the standard we’d apply now,” he says. “Some people who cardiologists would consider have had a heart attack would not make the criteria for the diagnosis.”

t is understood that senior executives at CommInsure were made aware of the problems with this definition in 2014.

A review was conducted of 40 heart attack cases which found that potentially more than half of critical illness claims could have been declined based on troponin levels alone. It is understood to have warned that imposing a high troponin threshold "arbitrarily disadvantages potentially more than 50 per cent of legitimate cases". The review also found that in 37 per cent of cases reviewed there was no verifiable document of the actual troponin levels.

It is also understood that the review called on CommInsure to change how it defined heart attacks to protect its brand. “There may be unnecessary time wasted, financial and opportunity costs, and the tarnishing of brand reputation when trying to decline legitimate claims that would reasonably have been admitted within the spirit of the policy,” the review said.

The stated purpose of the review was to help align insurance definitions to “contemporary medical advances”, noting that the diagnosis of heart attack for clinical and insurance purposes “is not reliant solely on a single factor”. It was not acted upon.

The Fairfax Media-Four Corners investigation has uncovered other disturbing revelations about the Commonwealth Bank’s life insurance division.

​These include refusing to pay total permanent disability (TPD) and terminal illness claim​s on the chance that a dying person facing organ failure may have their life saved by a transplant. A person can claim their life insurance if they are declared terminally ill by two doctors and deemed likely to die within 12 months.

Fairfax is aware of a case where the claim of a terminally ill person – who was on a transplant waiting list - was initially rejected because his policy was through an industry fund soon to tender for a new life insurance provider. A senior claims manager is understood to have suggested delaying the claim for as long as possible so it would be dealt with by the new insurer if CommInsure’s contract wasn’t renewed.

t has been less than two years since Commonwealth Bank boss Ian Narev “unreservedly” apologised for a scandal in the bank’s financial planning division involving forgery, fraud, missing files, a cover-up by management and thousands of customers who were given inappropriate advice and lost their life savings.

A Senate inquiry in June 2014 called for a royal commission to get to the bottom of CBA’s wrongdoing. But the royal commission was traded off for the bank agreeing to open up a compensation scheme for aggrieved customers.

CBA has since tried to rebuild its reputation. At the bank’s annual general meeting in December, chairman David Turner told shareholders that the bank had a plan for ethics to be an “ultimate competitive advantage”. “We think we will be the ethical bank, the bank others look up to for honesty, transparency, decency, good management, openness. That is exactly where we are trying to go,” he said.

​On Friday, Mr Narev said the Commonwealth Bank took ethics seriously. He said CommInsure handled around 22,000 claims a year with the vast majority being dealt with: “expediently and appropriately”.

Commonwealth Bank is on track to generate $10 billion in profit in 2016, which makes it one of the biggest and most profitable companies in Australia. In the past six months, its life insurance division made a profit of almost $200 million.

The news that James Kessel’s trauma policy claim would be rejected arrived a week before Christmas 2014. He says he was furious but didn’t know how to fight the decision. “If I [had] died completely … it makes me wonder, would they have found a way to get out of that as well?”

Heart attack is known by life insurers as one of the big four trauma claims alongside cancer, strokes and coronary artery disease.

CommInsure’s policy includes a clause that allows “any other medical evidence” to be presented that suggests the heart attack occurred to the same severity as that indicated by its specified troponin levels.

The trouble with this is that cardiologists say troponin is not a consistent measure of severity. “The more severe the heart attack, the higher the troponin level’s likely to be but it is possible to have serious heart attacks with lower troponin levels that could be quite threatening to the patient,” Dr MacIsaac says.

Trauma insurance such as Kessel’s is just one of the Australian life insurance industry’s major product lines. People can also opt to buy income protection insurance, which pays a proportion of a person’s income for a set period if they are unable to work. And every year, millions of Australians are passively channelled into life insurance policies through their industry super funds or through retail or corporate super funds run by the big banks. They may be barely aware that they have life insurance but they pay for it regardless.

he $44 billion life insurance sector has been a problem industry for decades. It is riddled with conflicts of interest such as the generous commissions paid to advisers to flog policies.

There has been a recent spike in life insurance-related disputes, revealed in the latest figures from the Financial Ombudsman Service. Disputes overall were up 6 per cent in 2014-15 with disagreements over lump-sum payouts, such as those for total and permanent disability, rising 20 per cent.

There was also a rise in disputes about income protection insurance with delays and denials of claims “key themes”.

ASIC is concerned about the rise in disputes. “Is there a good explanation or is it because some companies are changing their approach?” asks Peter Kell, ASIC’s deputy chair. “It’s very important that, if life insurers are experiencing financial difficulties, they don’t try and pick up the pieces by taking an unreasonably harsh approach to claims.”

Kell says ASIC has told the life insurance industry to lift its game. “We recognise that for too long there have been conflicts of interest in the way that life insurance is distributed… that the products have not necessarily been designed with the consumers’ needs in mind,” he says.

“Life insurance is a critically important product for ordinary Australians, [and] we need to hold the industry to high standards,” he says.

John Berrill, a lawyer with more than 25 years’ experience in life insurance, says a common problem is the way life insurance is sold.

“That’s buried away in the fine print and even if he had have looked at that fine print he almost certainly would not have understood the significance of that clause.”

There is no time limit for a decision to be made on a claim, leaving customers vulnerable to long delays. “Delay is a big problem that a lot of people experience,” he says.

A report into the insurance industry by the Australian Securities and Investments Commission (ASIC) in late 2014 found that 37 per cent of life insurance advice to customers was in breach of the law and almost 50 per cent of the advice failed when high upfront commissions were paid to advisers.

The industry relies on these commissions. More than 80 per cent of the industry, including CommInsure, uses such incentives to sell products. In the aftermath of the ASIC survey, the industry was put on notice to come up with a code of conduct, something the general insurance industry adopted years ago.

“The industry has been dragging and kicking to a code,” says John Berrill, who unsuccessfully tried to introduce a code of conduct to the industry just over two years ago.

Fast-forward to 2016 and a draft proposal has been released, which, according to David Leermakers, a senior policy adviser at Consumer Action Law Centre, needs work.

“The thing the life insurance industry really needs to think about now is, do they want to create a cardboard cut-out of a code of conduct which makes it look like they’re doing something, which perhaps staves off regulation for another couple of years, or do they want a code of conduct which really acknowledges those problems in the industry and makes an effort to change and to raise the standards of the industry?”

For people such as Kessel, it means questionable policy definitions can wreak havoc, inflicting emotional and financial trauma on people who have already been through an ordeal.

“You think you’re going to be looked after and then you get a kick in the guts. And then you just accept it. You say, ‘Right’, you get back to work. But these guys knew,” he says. “They knew they should have paid for it. Wow.”

Kessel has decided to fight back. He has engaged a lawyer. He is just one of a number of claimants that Fairfax and Four Corners have uncovered who seem to have been treated with anything but “utmost good faith”.