(Reuters) - Australia’s Freedom Insurance Group’s (FIG.AX) CEO and chief financial officer are leaving and the firm is slashing more than half of its workforce, as it restructures following damaging revelations at an inquiry into the country’s financial sector.
The firm, whose shares have been battered since the inquiry or Royal Commission began, said on Tuesday it would also stop new business sales of all direct insurance products.
In line with the reduced business activities, Freedom said it would cut its headcount by over 60 percent to 90 employees.
In September, Freedom had said it would to cease outbound sales of term life and trauma insurance as well as accidental death and injury insurance, after the inquiry heard that 85 percent of its customers who called to cancel policies ended up keeping the same or an amended policy.
It was also revealed at the time that Freedom had sold an insurance policy to a man with Down Syndrome who did not understand what he was doing, raising questions about the company’s direct sales method. The firm then refused to accept a request by the man’s father to immediately cancel the policy.
The inquiry, which released a scathing interim report on the financial sector last week, has already knocked the banking, wealth management and superannuation industries with damaging revelations of systemic malpractice.
Freedom’s shares hit an all-time low at end-August after it was listed among 10 firms to appear before the commission. The stock is down about 70 percent so far this year.
The insurer expects its restructuring measures to help cut annual operating expenses by at least A$15 million ($10.79 million). It will, however, incur about A$4.8 million of restructuring costs.
Freedom’s restructuring measures come on the heels of recommendations made in August by corporate regulator Australian Securities and Investments Commission on the direct life insurance industry.
Craig Orton, Freedom’s current Chief Operating Officer, has been named the new Chief Executive, replacing Keith Cohen.
Chief Financial Officer Jenny Andrews is also scheduled to leave the company.
Freedom will continue to service its existing 350,000 customers, whose policies will be unaffected by these changes, the company said.
Reporting by Nikhil Kurian Nainan in Bengaluru' Editing by Himani Sarkar