Explain your value – Law firm attacks risk advisers

23 April 2020

The financial planning industry must explain why, based on new Australian Prudential Regulation Authority (APRA) data, consumers appear to be worse off when they consult a risk adviser, according to a senior lawyer within plaintiff law firm, Maurice Blackburn.

The firm’s superannuation and insurance principal, Josh Mennen has pointed to APRA data released this week dealing with life insurance claims and handling processes and has claimed the report reinforces the superior value of group insurance through superannuation.

He said the report had shown group insurance continued to have a key role in delivering value and strong outcomes for consumers, particularly when compared to policies sold by financial advisers.

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“This report has some very compelling data that makes clear that group insurance through super remains a crucial product that delivers significantly greater value for consumers than other policies, including those supposedly tailored by financial advisers,” Mennen said.

“The data show that the claims paid ratio – the dollar amount paid as a percentage of annual premiums - for super total and permanent disability insurance was 85%, compared with 45% when sold by financial advisers,” he said. “It also shows that income protection through super led to just 33.7 disputes per 100,000 people insured, compared to retail income protection policies, which came in at a staggering 150.5 disputes per 100,000 people insured.”

“This reinforces that while adviser-sold policies are often marketed as a bespoke product, too often they are compromised by conflicts of interest, including insurers paying trailing commissions that result in poor product selection and claim disputes caused by underwriting complications.”

“The financial planning industry must explain why, based on this data, consumers appear to be worse off when they consult a risk adviser,” Mennen said. “It also must outline how it is going to ensure insurance recommendations are genuinely in consumers’ best interests in order to win back public confidence.”




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stats and damn lies. There are more disputes with advised IP because advisers get their clients to claim and go into fight for them, really simple how you get that figure. Other data shows higher % of successful claims when advised. And payouts per premium are low, because of artificially suppressed premiums in group, and because most private insurance is taken out by higher socioeconomic demography who generally have less health issues, but prefer a private contract. Sure group insurance has its place, but each one is different, and advisors can read the PDS for flaws.

this leech has one measly bachelors degree a llb, and a dip fp. he's not qualified to comment.

get lost turd

how many people are enjoying terry McMaster ( a lawyer himself) suing three law firms for negligent advice?

hands up in the air yay o yay o yay

yeah, baby, I'm loving it

As the lawyer awoke from surgery, he asked, "Why are all the blinds drawn?" The nurse answered, "There's a fire across the street, and we didn't want you to think you had died."

I see this article was posted on the IFA website as well. Money Management would do well to avoid giving air time to Lawyers like Maurice Blackburn who's only interest is themselves. Their whole business is based around charing $10k to complete claims paperwork for super fund members who could easily do it themselves. The so called conflicted trailing commissions that advisers receive mean that advised clients don't pay ludicrous fees to process claims as they are funded by the commission.

All the claims stats show that advised clients have more cover and a higher claims success rate than group or direct policies.

Can the law firm confirm if any group life providers or industry funds are clients of the firm. That would only be fair to disclose in these days of full disclosure.
Would also like to hear their opinion on why lawyers charge up to 30% of TPD claim payouts for clients, something advisers do for nothing !

Well said Robert, fully agree.

Santa Claus, the tooth fairy, an honest lawyer and an old drunk are walking down the street together when they simultaneously spot a hundred dollar bill. Who gets it? The old drunk, of course, the other three are fantasy creatures.

Perhaps the reason for this is that group insurance is not individually underwritten, hence the claims experience is significantly worse for the insurance companies. When policies are underwritten the insurer has some control over the risk that they take on, whereas a lot of sub-standard lives are automatically insured through group superannuation insurance plans. I would expect that due to automatic acceptance limits, the average payout under group insurance plans would be a lot lower than for individually underwritten retail policies. I don't believe it has anything to do with poor product selection or poor advice. Under the current regime, there is no conflict of interest in recommending one insurance product over another as the commissions paid by each provider are the same.

You hit the nail on the head perfectly Scott.

Statistical interpretation is generally left to statisiticians and epidemiologists, not ambulance chasing law firms.

The fact that group based definitions for IP are weaker than split retail/super alternatives hasn't been considered. My hypothesis is that per policy issued, more retail policies get paid out that group policies.
Also, I've disputed claims on behalf of clients. Unless a group client comes and finds me, i cannot advocate for them.

Where is this taken into consideration with Mennens claims that retail clients get little value from life advisers?

That's because we fight for fair.
An advised client is far more likely to lodge a claim in the first instance because they have an adviser to call and they are also far more likely to lodge a dispute when they have an adviser in their corner (they also have more cover and broader coverage with higher quality products).
This is evidenced pretty clearly in those same numbers by the fact that the Apra data sheet shows that DII have more withdrawn claims and less disputes while advised income protection has less withdrawals and more disputes. It's more likely that an adviser will help their client fight while those in difficult claims circumstances simply walk away when they are by themselves.
Insurance is complicated that's why certain law firms make enough money from this area to run TV advertising campaigns.
Every adviser who has offered insurance advice will have a story of the client who had a health event they could have claimed on but never did. It's no surprise at all that there would be more disputes from advisers.
Thanks to trail commissions we don't charge $40,000 + to assist with a dispute at the worst possible time either.
Per capita statistics punish smaller participants for minor differences, there are 9x less disability income claims than there are GSC claims so in real number terms the disputes on GSC is actually double the number of claims disputes on advised IP. This is just as misleading as a per capita number which is why this point was never published in the paper but buried in the statistics for people to create articles out of.

These ambo chasing idiots need to be after the real money - they'd get a bigger pay day going after industry super screwing over members with reduced insurance benefits over the last 5 years for higher premiums (not to mention the current illiquid assets fiasco).

What utter morons, but then again wasn't this the mob that had Gillard in their ranks at one point? If so, that would explain why they haven't attacked the union funding ISA.

sorry is this the same law firm that promotes a free "insurance check" within super only to lead to high legal fees which is to the financial detriment of the person they are purporting to help?

I'm guessing that this is the start of a tsunami of litigation in Australia! You'd have to be a mug to work in this industry.

Never let the truth stand in the way of a lawyer and a pot of money. This dude is just lashing out because his gravy train is about to slow to a trickle. He won't be getting any business from my clients, as I manage the claims process for free. PS.

The premise of this argument seems to be that insurance is a simple choice between group and advised. But it's not. Group insurance is an option that is simply not available to many people. Even when it is, the types and amount of cover is quite restricted. Auto accepted group insurance is usually a great option when it's available. Most advisers would not recommend replacing good group insurance with something else. That would breach BID in most cases.

Where advised insurance adds value is for clients, products, and sums insured where auto accepted group insurance is not available. The more relevant comparison in those cases is between advised insurance and direct insurance or underinsurance. Advised insurance is clearly superior to those alternatives.

We have requested claim forms for a client from one of the biggest funds around and 2 months later they haven't sent the forms. The client (who didn't realise they could have claimed) would likely give up on it now. Not an adviser though. And since i haven't received a commission on this policy i might just take 30% of the claim. Any lawyer would see that as fair.
MB are thinking of their own interests. Covid super withdrawals will cancel many IS insurance policies so their 'pie' is getting smaller.
A nice unintended consequence might be for those members to keep the cover and claim via MB who will burn alot of time trying to get a policy that wont pay due to employment and they can then start a fight with the trustees for fee for no insurance. Members might end up with better cover?

They are talking about the name people most group cover is underwritten from the same company, LGIA super is underwritten by TAL guess what TAL also sell Retail insurance the figures they are trying to point out are incorrect.

Other data shows higher % of successful claims when advised. And payouts per premium are low, because of artificially suppressed premiums in group the real number is how many policies exists in each sector in total but that would still be irrelevant as if it really matters which company underwrite the insurance and if there is an issue its from a company level that sells the insurance in the first place the advisers...

Got to love how they try and turn numbers into their favor bases on incorrect thinking yet another try to scapegoat advisers again

Advised insurance is always better because it can be CUSTOMISED TO COVER THE RISK OUTCOMES THE CLIENTS WANTS COVERED....bare bones Group Insurance can't. Also, Lawyers charge fees (approx $400 p.h.) to handle insurance claims whereas all, many, most or some Financial Advisers do not. I guess those lovable Lawyers need to create business for themselves somehow. The exact reason why SoA's are now such all encompassing ACM's (i.e. Arse Covering memo's) is to protect advisers from vexatious litigious lawyers and ASIC and to prove that we advisers actually do act in the best interests of our clients.

In every race there is a horse called "Self Interest" and from a legal perspective Maurice Blackburn are the Gold Medallist at it.

Is this the same "group" insurance for which fully underwritten and advised policies commissions will cease due to "grandfathering" ending?

What a load of crap, the key is to this is remembered that Maurice Blackburn are in bed with Unions and Industry Funds that says it all.

In the case of TPD Insurance cover, it is now impossible to place Own Occupation TPD definition under a superannuation structure as the definition does not satisfy the SIS definition.
The majority of Own Occupation TPD cover would be placed through the advised channel often in conjunction with Trauma and possibly Income Protection Insurance.
In the event of a claim,the success rate of having to prove the permanent disablement of your own or current occupation as opposed to having to satisfy the insurer and the Trustees that the member is permanently disabled from any occupation at all is blatantly obvious.
In addition, it is often discovered by members of Group Insurance under superannuation funds that in the event of a Any Occ TPD claim being paid, the Income Protection Insurance benefit may cease providing further benefits or the default IP cover will only provide benefits for a 2 year maximum period.
Lastly, many Group Insurance/Super members will try and claim against their TPD cover for serious illness events that do not render them permanently disabled and are consequently rejected, even when they may be absent from work for 2 years, however, if they were to have advised Trauma Insurance, not assessed against the members ability to work and then receive an Own Occ TPD claim at a later date, but in the interim period receiving a regular monthly benefit via their Income Protection cover that will continue providing a benefit on a permanent basis until age 65 or 70, which is the better outcome for the client, their family or their business ???
If Josh Mennen thinks that advisers do not add value to the claims outcome for clients either he is a misguided and ill informed individual or he has never experienced a personal or closely related friend, colleague or family member who has benefited from quality advised advice.
These comments are all about an aggressive law firm pushing their own interest, but cloaking it in manipulated data to suit their purpose.
This clearly identifies the vindictive and unscrupulous identity that Maurice Blackburn operate under and says an awful lot about Josh Mennen as an individual.

Customer....what you say is correct. Under non-advised Group Insurance "Any Occupation" TPD, if a surgeon suffers an injury or illness that renders him/her unable to wield a scalpel, an insurer may unlikely payout as they would deem the surgeon can still work in a medical administrative / advisory capacity. Equally, if a carpenter can no longer wield a hammer or nail gun, an "Any Occupation" definition would deem he/she could still work as a building estimator or site supervisor. "Own Occupation" would in both events qualify for a payout. Also, in the event of "Any Occupation" TPD, Income Protection held solely inside super would be trapped inside super because the SIS Act says Income Protection can only be released / paid out for "Temporary" Disability. We should all ignore Mr Mennen. He is a mere Lawyer who doesn't understand the full implications and complexities of what he is asserting. He is not a Risk Insurance Specialist and can't be expected to know everything. He is clearly marketing his own cause.

No cars on the road. No crashes. Blackburn's better generate some work.

On the Australian Electoral Commission register of donations for the 2018/19 financial year, Maurice Blackburn Pty Ltd donated no less than $554,805 in 67 separate donations spanning from 2/7/2018 to 3//06/2019.
66 of those donations totalling $354,805 were all to the Australian Labor Party.
A massive single donation of $200,000 was made to the ACTU on 24/04/2019.
If this doesn't give a clear indication of the ideology of this law firm and the vitriolic hatred of capitalism and free enterprise then nothing does.
In order to keep on filling the coffers of the unions and the Labor Party with political donations, it is also necessary to generate those funds through ripping off vulnerable insurance claimants with exorbitant and grossly inflated legal fees in order to continue waving the red flag against the enemy.
Of course the ACTU is a large beneficiary of re-directed Directors Fees from Industry Super and received a staggering $2,050,363 from these fees between 2013-14 and 2016-17 .
So, here we have the money go round in order to continue funding the war chest against business that does not subscribe to their ideology.
The unfortunate reality here is the volume of fees and costs these law firms take from the claims proceeds of these vulnerable people is so out of context with the majority of these clients financial position or affordability, they would never be able to afford the massive fees, if it were not deducted from the claim proceeds.
That is exactly why they only accept cases they know they have a significant chance of winning, because its all about the money.
Funny that isnt it.....even though these firms are ideologically opposed to capitalism and making bags of money, they are doing just that at the expense of people who cant afford it.
How very ethical.

Just don't give any airtime to this parasite. The Royal Commission has done customers a lot of good and will deplete the gravy train of leeches like Maurice Blackburn who take 30% of claims in situations where customers could easily have received 100%
If any customers are reading this. Use your adviser or go direct and either way fight your corner if necessary. DO NOT use Maurice Blackburn or any other lawyer. They are a rip off and a con.

This is unfortunately a highly irresponsible broad-brushed shotgun statement based on statistics taken out of context, with at best a surface-level interpretation to suit a transparent self-interest agenda. These comments should be retracted.

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