'Legacy IT' factors into MLC Life Insurance's $10 million fine

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"Poor systems" partly blamed for benefits not being paid out.

Legacy IT systems were a contributor to MLC Life Insurance not paying out rehabilitation benefits to 119 customers that made claims under their policies.

'Legacy IT' factors into MLC Life Insurance's $10 million fine

The insurer was fined $10 million by the Federal Court late last week under proceedings brought against it by the Australian Securities and Investments Commission (ASIC).

ASIC said in a statement that MLC had “a lack of appropriate systems to administer its insurance policies.”

The watchdog also called out "poor governance" and "poor controls" around IT system use.

These included the use of a mail supression flag on certain customer accounts, which was enabled through MLC's policy administration system. [pdf]

The Federal Court stated the insurer did not “adequately train” its staff to remove the flag or “appropriately monitor relevant ... staff’s use of the flag".

ASIC deputy chair Sarah Court said customers “should be able to trust that their insurer will pay the benefits promised to them and keep them properly informed if there are changes to their policies.”

“The failings recognised by the Court are the result of poor governance, poor controls and poor systems, such as legacy IT systems," Court said.

“MLC customers deserve to have their insurance policies administered properly."

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