Shine Lawyers partner William Barsby wrote in a blog, published by ifa sister publication Risk Adviser, that advisers are definitely needed to ensure that the basic duties of disclosure are complied with and explained to clients in terms that are easy to understand.
Otherwise, he warned that clients will throw away good money “at rubbish policies that will simply not respond when it is needed most”.
“The adviser is the key to the long-term survival of the life insurance industry in Australia and more energy ought to be placed into strengthening this space,” Mr Barsby said.
“While short-term profits may seem understandably attractive to life insurers, the long-term litigation pain could be disastrous for their brand and the future security of their customers.”
Drawing from his own client experiences, Mr Barsby said that the everyday consumer does not have a reasonable grasp on the legal concepts and impacts of the duty of disclosure, fraudulent non-disclosure or even innocent non-disclosure.
He noted a significant increase in clients purchasing life insurance online without an adviser, and that “disgruntled life policyholders” contact him on a weekly basis on claims denied as a result of this gap in knowledge.
“The common theme, in this emerging bundle of aggrieved policyholders, is that they did not understand the significance of the duty of disclosure and their prior medical history,” Mr Barsby said.
“It is often the case that when the time comes to make a claim, insurance companies will actively investigate a person’s medical history to evade payment and repudiate the insurance contract.
“While this process may arguably be good post-claim due diligence, once this occurs, I can assure you that any consumer sentiment that did exist quickly fades.”
Good article and I agree. This is exactly why the FSC want advisers out of the way. What do they care if they have a few out of court settlements. They will still make more profit on junk insurance with high claim denials.