CommInsure scandal unfairly linked to advice, say planners

Advisers are feeling wrongfully targeted by Industry Super Australia (ISA) and say the recent scandal regarding CommInsure's mishandling of claims has nothing to do with advice but rather with industry super funds.

In a statement yesterday, ISA reiterated calls to ban commissions on life insurance and pointed to Fairfax Media's reporting on CommInsure misconduct as further proof that the industry needs reform.

The story generated concerns from commenters on the ifa website, who said ISA chief executive David Whiteley had incorrectly linked the two matters.

"Not one case in the story mentioned that the client had received advice from an adviser. The ISA has some nerve bringing up the commission debate on the back of a story that highlighted issues their own funds have when it comes to protecting everyday Australians," one commenter stated.

Another noted it was "Interesting that the Fairfax Media report predominantly showed the flaws of group insurance (including industry super funds) and institutional failure."

Speaking to ifa, Mr Whiteley explained that the CommInsure scandal relates to life insurance commissions because ASIC's report on the industry had linked commissions with poor outcomes, including the denial of claims. 

"Firstly, ASIC pointed to evidence that advisers failed to adequately consider their clients' personal circumstance and needs, leading to situations where consumers received inferior policy terms, paid more for cover, had health issues excluded and, in some cases, had claims denied where they previously had cover," he said.

"Secondly, ASIC drew a number of connections between the structure and payment of commissions and poor commercial outcomes for insurers that had 'real commercial effects'. They observed a key structural challenge for the industry included 'downstream issues affecting profitability', such as increasing costs and increasing lapse rates."

Also speaking to ifa, Senator John Williams said the concerns lie with industry super funds, and that Australians should pay more attention to where their money is going.

"The big concern here is that millions of Australians would have life insurance they are not even aware of with their superannuation. And here is the question I ask: 'Should this life insurance in your super be an opt-in, not an opt-out'?" he said.

"My strong advice to each and every Australian that has superannuation – especially with an industry super fund – would be go and look at your policy, look at your superannuation and look at what they are taking out and what sort of policy you have got.

"If people are taking your money every month, [you need to ask] why are they taking your money and what is in it for you?"

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+1 #35 AJ Dann 2016-03-16 10:56
I'm with you Roderic. It appears our detractors take every opportunity as well as make rubbish up yet our collective organisations sit there armed and dangerous with so much great counter arguments yet cant seem to get a shot off. I just cant understand why they let so many opportunities go begging. This latest example is just so common yet the BS statements and mistruths go uncontested by the very organisations that are meant to represent the industry. Where are they....Stuffed if I know. No doubt I'll have the FPA/ASA staffers on my case, both of which in our practice we pay membership to, stating what they are doing yet I'm not seeing it cut through. Putting our case forward should be treated like a street fight not a latte sipping contest.
+2 #34 Roderic Morgan 2016-03-16 10:37
Here is yet another opportunity gone begging for the FPA and other adviser organisations to justify their annual fees and pitch a defence. We never hear from them and no wonder I have refused to be a member until I am forced to.
+1 #33 Jimmy Neutron 2016-03-15 10:58
Whitely doing all he can to shift the focus off the union super funds and the role that their trustees have played in the changes to insurance policies. Would be interesting to see what the Australian Super trustees had to say in relation to the changes in the TPD definition with their cover. Now one of the worst in the market, changed with little or no notice to members.

When the unions favourite legal firm Suck it up & Gotcha say that it's a disgrace, you know it must be bad.
+3 #32 Dave from Perth 2016-03-12 14:40
The CommInsure sage has absolutely nothing to do with commission but certain people in CommInsure claims department and outdated definitions. A very low stab Mr Whitleley
+5 #31 DanK 2016-03-10 18:34
@Joe Bloggs
I believe more than likely "Advice" was provided for the trauma contract. May have purchased direct...What we dont know is when it was purchased. If many years ago, it may well have been a market leading product (pre CBA purchase). You cannot blame an adviser for providing advice that at the time may well have been appropriate. It seems Mr Whitely and other vested interest groups can blame an adviser for poor culture within a product provider. God help the adviser if he actually provided a review and put in place a more up to date policy...that would be churning you see. As although the client would be better off, the adviser would have been paid for his time and expertise but the insurer would then have to compete with other insurers. Sometimes Joe clients health changes and they get "stuck" in out of date legacy products and purposefully priced out by the insurers in the hope they drop their cover to move to more profitable "versions" of their policies. Usually only the sick and uninsurable remain in the pool, so prices just keep on rising until it is uneconomical for the client to retain the cover. Clearly again though this is the advisers fault as they recieve commissions.
0 #30 Joe Bloggs 2016-03-10 16:54
Forgive me if I'm wrong but trauma cover cannot be offered under group schemes? Doesn't that mean that for guy claiming for a heart attack would have needed financial advice?
+4 #29 Paul 2016-03-10 11:00
The deals that Comminsure (and two other large insurers) did with the union funds were never sustainable. It is no surprise those insurers have sharply increased premiums and/or denied legitimate claims to try and claw back their losses. Whitely and his union cohorts may not be totally responsible for this, but they are certainly very involved. Perhaps this is why he is trying to deflect attention onto financial planners.

Any further investigation of Comminsure needs to take a close look at the deals they did with the union funds to help the unions buy superannuation market share with unsustainable insurance offerings.
+10 #28 Good idea.. 2016-03-10 09:34
Great idea about time the good people in this industry stand up to these money grabbing no caring financial service grubs like Whitley.

The smearing and cheap shots need to stop...

The facts and truths will easily defeat this bloke shame most of the media are to happy to buy the BS and attack the easy target.

I agree we start to take this muppet on if our industry groups wont.
+15 #27 A J Dann 2016-03-10 09:12
Why don't we hit up Mr Whiteley about his concocted BS on twitter. Bit more of a public domain where every time he makes rubbish statements they can be hit to the boundary. There are some great statements below that deserve a wider audience than IFA. Get on twitter and every time he opens his mouth we can be there in his face. He has too many free swings at us and we need to start swinging.
+1 #26 Angelique McInnes 2016-03-10 08:59
There are both vertical (for example managing conflicts of interest from association) and horizontal (putting the interest of the client first) domains and responsibilitie s between advisers and licensees. Identifying each one’s contribution is difficult as well as identifying individuals responsible for breaches operating within entities.
+4 #25 Frustrated and annoyed. 2016-03-10 08:51
Financial Services, where professionalism starts at the bottom and is gone by middle management.

How can the standard be raised in our industry when organisation and mis information occurs like this buy by the "leaders: in our industry.

If the job of the regulator Asic, Apra etc and the industry groups such as the FPA is to protect the industry and it's participant then they have failed not only the clients but Advisers.
+4 #24 Aaron Zelman 2016-03-09 22:36
Is it too much to expect the AFA to be weighing in here? These scandalous claims have zero to do with advisers and would arguably never have occurred with adviser assistance.

The Industry super fund movement is taking such a cheap shot. It is really disgraceful. The validity of the ASIC report in question is dubious to say the least and has zero to do with the issues at hand. In fact, the move to eradicate risk advisers by the likes of CBA and the other colluding parties at the FSC will mean consumers' interests will inceasingly be downplayed in favour of profits - after all, it's better for a bank to get its insurance business from advisers who can't keep them accountable and competing with the wider market on quality, price and claims.
+21 #23 Craig Yates 2016-03-09 16:27
Message to David Whiteley:
There are 9 Industry Super funds who currently have their Group Insurance with Comminsure of which, according to the ISA website, 5 are ISA members.
I think David Whiteley, rather than attempting to railroad this situation onto any misaligned and misguided debate regarding advice or commissions, you need to be thinking about your marketing slogan.
"All in this together" and "Run only for the benefit of members" w appears to be not quite as cosy as a few days ago.
+2 #22 Keven Hooper 2016-03-09 16:05
Ian Narev, Managing Director and CEO of the Commonwealth Bank Group, must surely now be demanded by all and sundry to promptly resign his untenable positions or be sacked by the CBA Board. Ian Narev is ultimately responsible for the bank's previously uncovered disgraceful financial planning practices and now this week's outrageous CommInsure revelations of treachery against its own customers. These are both extreme systemic failures of corporate governance and attacks on Australian consumers committed under Mr. Narev's watch since appointed on 1 December 2011. Mr. Narev's response to both debacles (which should be the subject of a Royal Commission) has been appalling. He should go and go quickly.
+5 #21 James 2016-03-09 15:55
Pavel, you're kidding yourself. Say one thing, do another?

Under super LAW the super trustee has an OBLIGATION to look after it's Members interests.

Yes the product supplier failed to deliver in this instance, but so did the Industry Super Fund!

Two failures = the system FAILED the Member.

Wiping your hands clean only replicates the very same behaviour you supposedly deplore.

BTW, kudos to Dr Benjamin Koh. He's taken plenty of heat on this, what a true professional. That's what it comes down to.
+4 #20 joe 2016-03-09 15:17
Quoting Pavel:
Come on, now industry super funds are somehow responsible for poor ethics and practice exercised by the banks (again). As several more whistleblowers, who work in the industry and engage insurers all the time, have come out over the CommInsure debarcle and warned, this is not uncommon in other providers too.

Let's get fair dinkum re where the disinfecting sunlight need to be trained, and it's not industry funds, SMSFs or many we'll run non-bank wholesale funds.

Pavel, Whiteley brought the fight to planners with his misleading comments.
Don't be biased and say the ISA is anything but involved in yet another fiasco
+11 #19 OTF 2016-03-09 14:34
Our business has had many claims paid out without any problems by many different insurers including Comminsure. Could it be that when a policy is put in place by an adviser, it is the right policy with the right terms and with less chance of non disclosure and hence better claims payout experience?

Why were the industry super fund clients in the Four Corners program holding up Comminsure brochures instead of Hesta and Care Super brochures? Why did the industry fund people not fight on behalf of their clients with the insurer like we advisers do for our clients? And what happens when there are claims on the directly sold insurance policies that are not paid even maybe for legitimate reasons? People do not read the PDSs and then are shocked when the policy does not pay out. All advisers know the shortcomings of many insurance contracts in super - clients don't.

But no one ever talks of the value of a good adviser or the work that is done for the commission the adviser gets - the only thing that keeps coming up is the high commissions paid.

Do industry funds get paid a "commission" or a payment by another name when they put in place a group insurance policy? Do the people who work there get a wage for the work they do? Why were their clients not able to go to them for assistance when their claim was not paid?
+4 #18 Jason 2016-03-09 13:51
We are easy targets. It's so much easier to attack an industry where the highest educational standards for entry are a 4 day course. I don't hear industry commentators come and bag out Doctors when drug companies kill someone. Oh wait Doctors are professionals with degrees, we're just a bunch of sales reps.
+1 #17 Joe 2016-03-09 13:51
Quoting John Edwards:
"...the reality is he doesn't decide our value - the client does." "...the microscope will eventually focus on the execs in the banks,insurance companies and industry super funds and what value they add" "In time industry fund members will start asking this question"

John while I would love to agree with you, unfortunately the adage 'perception is reality' is correct. With smear campaigns, multi million $ advetising (compare the pair), clearly biased reporters in the nationally funded network not to mention McF elsewhere, and an eerily quiet front from both the FPA and the AFA, the vast majority of the public will not know better.

If they did, then that series of misleading ISA advertising would have been howled down years ago. Mobs follow trends and hyperbole, war time Germany is a good example of this, and the momentum is clearly not on our side.

You are correct that the few informed clients who seek advice will continue to do so & be better for it, but if you are waiting for some 'day of reckoning' you will be disappointed for the foreseeable future (short of independent directors being appointed to ISA boards and prior misconduct being discovered, though it would be interesting if like the Unions during the RC, whether some past records accidentally get destroyed or go missing).
-18 #16 Pavel 2016-03-09 13:39
Come on, now industry super funds are somehow responsible for poor ethics and practice exercised by the banks (again). As several more whistleblowers, who work in the industry and engage insurers all the time, have come out over the CommInsure debarcle and warned, this is not uncommon in other providers too.

Let's get fair dinkum re where the disinfecting sunlight need to be trained, and it's not industry funds, SMSFs or many we'll run non-bank wholesale funds.

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