A Senate committee has heard Comminsure could face criminal penalties for its alleged mishandling of claims.
The corporations watchdog says criminal charges remain "on the table" as it investigates the Comminsure scandal.
A joint ABC Four Corners-Fairfax investigation uncovered unethical tactics by the Commonwealth Bank to deny payouts for sick and dying policyholders.
The bank's chief executive, Ian Narev, said in March he was "saddened and disappointed" by the handling of the cases, and remained committed to running an ethical business.
Australian Securities and Investments Commission deputy chairman Peter Kell told a Senate hearing on Friday there were two major pieces of work underway.
ASIC's investigation of Comminsure had so far gathered more than 50,000 documents and officers had interviewed a number of people.
"It is a very significant and serious investigation," Mr Kell said.
"At this stage all options, in terms of regulatory outcomes, are on the table - whether that is administrative, civil or criminal."
He said the second part was an industry-wide review to determine whether other insurers were also mishandling claims or if there were any systemic issues.
ASIC has written to all life insurers to review five years of claims to identify any that were inappropriately denied.
A report on systemic problems is expected to be finished by September.
"It may well point to red flags or other risk areas we need to do further work on," Mr Kell said.
ASIC received extra funding in the federal budget and its chairman, Greg Medcraft on Friday had his term extended by 18 months.
"We are the tough cop on the beat," Mr Medcraft said.
The agency has undertaken more than 900 investigations over the past five years with 100 criminal convictions.