FPA defends role of life/risk advisers
In the wake of harsh criticism of life/risk advisers by plaintiff law firm Maurice Blackburn, the Financial Planning Association (FPA) has defended the role played by advisers in representing their insurance clients, particularly at claims time.
FPA chief executive, Dante De Gori, pointed out the manner in which the activities of financial advisers could actually impact data collected by regulators such as the Australian Prudential Regulation Authority (APRA).
“… financial planners regularly lodge disputes on behalf of clients. This will automatically increase the dispute rate from non-advocacy channels. Consumers may not be aware of dispute channels available to them. Financial planners are therefore effectively advocating and this increases the complaints, which will skew the reported data,” he said.
Further, De Gori said the recommended insurance amounts through financial planners were optimal to the client and tended to be higher to cover debt and address actual lifetime needs.
“Therefore, the higher the insured amount the higher the chance that the insurer will undertake a more rigorous approach to the claim. This is because one or more reinsurers may be involved complicating the claims process,” he said. “Disputes arise because the assessment may not be as straightforward as the consumer would hope. Financial planners are aware of this and it forms part of their service when handling such disputes.”
“When consumers obtain retail insurance through a financial planner or directly via the insurer, they are required to make various disclosures to the underwriter. This also occurs if the consumer tries to increase their group policy.”
“If the policy is underwritten, then the insurer has the right to investigate the truthfulness of the disclosures such as health history, occupation check and past times. This causes frustrations and delays and investigations can result in a reduction or denial of the claim. This gives rise to disputes,” De Gori said.
“However, with group insurance, more often than not it is an at-work test. The policy composition limits the insurer’s ability to go back historically, therefore there would be less dispute about non-disclosure issues. Financial planners play a critical role in educating consumers in the importance of being truthful at the time of application to reduce the risks of disputes.”
De Gori pointed out that financial planners are bound by the best interest duty and a rigorous FASEA Code of Ethics that required the client's interests come first.
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