* Royal Commission lists possible misconduct by insurance firms
* Clearview Wealth admits breaching laws over 300,000 times
* Inquiry hears of overcharging, surveillance of customers
* Zurich, Metlife and AIA subsidiaries report misconduct (Recasts, adds Suncorp disclosures, Clearview breaches)
By Paulina Duran and Byron Kaye
SYDNEY, Sept 10 (Reuters) - An Australian insurer said on Monday it had committed more than 300,000 criminal breaches when cold-calling customers, as a powerful inquiry into financial industry misconduct turned its attention to the insurance sector.
The inquiry, which has exposed widespread abuses across the financial sector this year, also heard that insurers had knowingly overcharged customers and employed flawed surveillance methods to assess policyholders' claims.
The Royal Commission has the power to recommend prosecutions and instigate sweeping reforms of the financial system, threatening to upend business practices at some of Australia's biggest financial institutions. executive at Clearview Wealth CVW.AX , the former life insurance arm of high profile insurer NRMA, provided an explosive start to two weeks of hearings on the insurance industry which began on Monday.
Greg Martin, Clearview's actuary and risk officer, said the firm had closed one of its divisions after the Australian Securities and Investments Commission (ASIC) accused it of breaching "anti-hawking" laws in every sales call from 2014 to 2017.
Anti-hawking laws require life insurance telephone salespeople to follow certain protocols like notifying potential customers of their right to join a "do not call" register and to seek independent advice.
"Breaching the anti-hawking provisions is a criminal offence, is it not, Mr Martin?" a lawyer assisting the inquiry, Rowena Orr, asked during the hearing.
"That's my understanding, yes," Martin replied.
"You accept that there were that many breaches?" Orr asked, referring to the 303,000 sales calls that the company had notified the regulator of as violating anti-hawking laws.
"Yes," Martin replied.
Clearview closed the direct-sales unit where the breaches had occurred, the inquiry heard.
"MISLEADING"
Orr separately told the hearing the inquiry had received admissions of possible misconduct from 16 domestic and foreign insurance companies.
TAL, the Australian unit of Japanese insurance giant Dai-ichi Life Holdings 8750.T , had said in a submission that it had made hundreds of misleading sales calls, including to people with limited reading skills, Orr said.
"From 2012 to 2017, TAL identified that approximately 3.5 percent of its monitored calls were misleading sales calls according to its internal criteria," she said.
American insurer Metlife Inc MET.N had said in its submission that it had used surveillance on policyholders who had made claims for mental health conditions, Orr said, without giving details.
Suncorp Group Ltd SUN.AX , the country's second largest general insurer, had told the inquiry about an allegation that its surveillance had caused a deterioration in a customer's mental health.
Hong Kong-based AIA Group 1299.HK said it had overcharged customers on their premiums, while the Swiss giant Zurich Insurance Group ZURN.S reported cases in which it had applied the terms of its policies incorrectly, Orr told the hearing without elaborating.
Insurance Australia Group IAG.AX , which holds a nearly 20 percent share of the country's life insurance market according to IBIS World, had told the inquiry of systemic problems with its sale processes and the handling of claims, Orr said.
The inquiry also received reports of misconduct from the insurance units of Commonwealth Bank CBA.AX , Westpac Banking Corp WBC.AX , National Australia Bank NAB.AX , and Australia and New Zealand Banking Group ANZ.AX , the country's four largest banks.
Before the public hearings, companies are asked to identify in their submissions any misconduct they had engaged in, or any conduct that fell below community standards and expectations since 2008.