In the most egregious of the systemic defiant conduct by uncovered by the Hayne royal commission, "CommInsure denied the insured's claim on the basis that she had a carcinoma in situ and her treatment did not involve radical breast surgery," counsel assisting Rowena Orr related in her closing for financial service royal commission on Friday.The third case study in Kenneth Hayne's insurance round concerned the handling by the Commonwealth Bank's insurance arm of claims made under life insurance policies that provided trauma cover. Facing the heat over the denial of the claim was CommInsure executive general manager Helen Troup."CommInsure formed the view that the treatment did not constitute radical breast surgery because she had not undergone a mastectomy. CommInsure did not explain this in the letter it sent to the insured and Troup acknowledged that the letter did not provide the insured with an adequate explanation as to why her claim had been declined," Orr told the commissioner, Kenneth Hayne. "The term 'radical breast surgery' was not defined anywhere in the insured's policy."Similarly, the policy did not specify that a mastectomy was required to meet the definition of radical breast surgery. Troup accepted that the lack of definition of radical breast surgery in the policy resulted in confusion for the insured."The insured and her husband told CommInsure they were not happy with its decision to decline the claim and in February 2017 they provided CommInsure with further information from the insured's GP and surgeon, Orr said. "Both medical practitioners said that the treatment the insured had for her breast cancer constituted radical breast surgery."Troup, Orr said "accepted that CommInsure's decision to decline the claim was unacceptable in circumstances where CommInsure was relying on a definition of cancer that at that time was about 18 years old, imposed limitations on that definition that were not expressed in the policy documents, and did not account for the way in which the insured had been treated by her doctors and the opinion expressed by those doctors."Troup also acknowledged that CommInsure had breached its duty to act  towards the insured with the utmost good faith by denying her claim in those circumstances."The insured made a complaint to FOS in April 2017. "Troup accepted that CBA's engagement with FOS in relation to the complaint fell below what the community would expect of it. "Specifically, CBA chose not to respond to FOSs request for information, or to seek an extension of time to respond to that request."Ultimately, FOS made a recommendation in favour of the insured.The insured and CommInsure accepted the recommendation and CommInsure paid the insured A$169,305, plus interest of just under $5000. "Ms Troup acknowledged that FOS made the right decision and that CommInsure's handling of the claim caused distress to the insured," Orr said.