Maurice Blackburn names AIA, CommInsure and TAL

Plaintiff law firm Maurice Blackburn has told the Royal Commission into Misconduct in Banking, Superannuation and Financial Services that insurance codes of conduct both inside and outside of superannuation need teeth.

Detailing the content of its submission, Maurice Blackburn claimed the life insurance industry’s self-regulated code of practice was failing to protect consumers and warranted serious scrutiny by the Royal Commission.

Maurice Blackburn principal, Josh Mennen said the industry had been given ample opportunities to scrutinise and regulate itself through the code of practice, but it was obvious it was inadequate and failing to hold the troubled industry to account.

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“The life insurance code of practice was only implemented on 1 July 2017, but already from our firm alone we have reported over 700 breaches of this code in that short period and we have outlined the insurers who are the main culprits for these breaches – the worst being AIA, CommInsure and TAL - in our submission today,” Mennen said.

“The industry can’t brush off its non-compliance with its own code as it has sought to do by calling the claim assessment time limits ‘aspirational’.  It must be held to account to ensure sick and injured insurance claimants are getting fair and reasonable treatment,” he said. “Meanwhile, the voluntary insurance in superannuation code of practice is shaping up to be just as disappointing.’

“It is unenforceable, has no independent administrator and as an extension of the life insurance code of practice, it has inherited all of its flaws.  Those super funds who do decide to sign up aren’t required to comply with the code until 2021.’

“That’s why we have asked the Royal Commission to recommend that codes of practice be required to have ASIC approval and enforceability, with robust sanctions for failure to comply,” Mennen said. “We have also asked the Royal Commission to give consideration to ensuring enforceable codes enshrine standard definitions, with clear timeframes for processing claims and setting out remedies and sanctions for code breaches.”

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Maybe ASIC can look at what goes on in terms of pricing when one insurance company takes over another and they keep both brands. Case in point AIA takes over Comminsure, then within 4 months Comminsure increases both level and stepped premiums for thier IP/Trauma clients. AIA keep the premiums as they are, you would assume to chase the new business. But on the other side of the coin, comminsure is smashing premiums up by 15% if not more for existing clients to add some fat to that book. Of course any clients with any health issues just either cancel or reduce cover, they cant go anywhere else as they will get exclusions. They are trapped. This is totally unfair!

How much does Maurice Blackburn take of a lump sum payment when they manage a claim for a client? Financial Planners do it for free.

Wait until the Royal Commission gets wind of how poor the claim's experience is with industry funds. The trustees of those funds need to hauled over hot coals. I'm assisting a client with a very straightforward TPD claim with QSuper at present and their conduct has been nothing short of disgraceful.

Hi, are you a lawyer that could assist me. I’ve had a tpd claim lodged with QSuper since 2015 and they’ve refused to even process it, let alone decide it. Currently trying complaint process with AFCA but the more it’s investigated the more outrageous it gets. If you can help please email me [email protected]. I don’t have any legal representation. Thank you.

After Labor & the Union Super funds started attacking the life insurance agents & what they earned, consumers ended up losing even more, as now the Lawyers can take up 20 percent of all their insurance claims. You even see their adverts on TV now. In past decades, the old life agents actually took pride in fighting to get the life companies to pay their claims. It seems one step forward, ten steps backwards.

The Code was just another hurdle the FSC placed in the way of regulators and now it's been shown to be made of straw. The same FSC that always wants to point the finger at 'bad' financial advisers. No wonder ETF's and direct equities via vertical integration are taking off, it's the only way to remove yourself from the 'game'.

Unfortunately, most Life companies have forgotten the business they are in.
Life companies haven't realised that the adviser is their client and the person on the application is the adviser's client.
Without the adviser in most cases the life company doesn't have a client.

It's almost impossible to differentiate products, and if premium is your guide to securing business from existing clients then you will need to consider the following.
1. Can you move a client without doing a full health check first.
2. What will you do if the client is moved and the new company raises their premiums after 12 months by10%- 15% above what they were the previous year.
3. The impact of LIF legislation, which means you will need to retain a client for at least 4-5 years on level commission to recoup what you might of earned in 2017.
4. You will need to see and write at least 4 times as many clients as you may have in 2017 on a level commission basis.
5. Soon there will be only 5-6 life companies,...offering similar inferior products,.... a cartel by any other name.
There is no question, the life insurance industry despite rhetoric to the contrary doesn't want independent life insurance adviser to exist.
The ramifications of that are still to be felt by the consumer, the government and the life insurance industry as a whole.

The RC should look at the excessive fees taken by Lawyers for managing a claim.

On another point I wonder if all these complaints are from direct insurance over the phone/internet. Maybe a lot of this could have been avoided with proper advice that adheres to the client best interests.

The FPA chairman runs a business that takes fees for assisting FOS claims, I don't know what they charge, but you are asking them to justify their fees, but don't clients sign off on Client Service agreements?

I can't see the dodgy FSC and its members coming out of this well. Their initial code was a complete con job and worthless and they can only blame advisers for their shortcomings for so long.
What we are seeing from these FSC members is increasing existing premiums whilst reducing premiums on new business trying to actually encourage a churn issue that was not there in the first place. AIA took over Comminsure and have reduced AIA new business premiums and hiked up the premiums on the Comminsure book. TAL's practices in the direct markets are again nothing short of crooked.
These FSC members have conned government with the LIF to get rid of advisers to be able to sell junk direct insurance and Maurice Blackburn and the other lawyers are just as bad. They take ridiculous fees to "help" settle claims which risk advisers would do for free and are secretly rubbing their hands with glee at the demise of the risk adviser. Its time government realised that the best thing for customers is good risk advise from the very specialists they are determined to wipe out.

Seven years ago ie in June 2011, I wrote

Over the last 8yrs we have tried to introduce fee for service for insurance work numerous times without any real success in the majority of cases, so I am definitely interested to hear how you think it is going to work. Please provide an example of how an adviser is compensated for uncovering the need, their time, knowledge and experience and the client benefits with adequate cover, assistance on application and claim. All I can see is a system that eliminates choice and service which are two key aspects I know that many people highly value. But I suppose that is what the Labor system is founded on. We moved to fee for service for all other areas of financial planning 8yrs ago however after numerous attempts and at after enormous cost to our business we have settled on taking the insurance commissions and offsetting them against ongoing work for our clients be it claims or reviews. This particularly suits the young adult children referred to us by our clients and it suits our clients. Our business relies on client referrals and focusing on what is best for our clients whilst still running a profitable business.
Anyway before these changes are finalised it would be good to see how you envisage the whole process of advisers assisting Australians to be adequately insured from whoa to go including assisting with claims would work under a nil commission environment and what would be a fair remuneration structure for all.

Fast forward to April 2018,
The reason I find this interesting is that I now know solicitors charge about $6,000 per policy to fill out the paperwork for a claim. In the instance I am referring to the guy had a brain injury. There was no argument as to whether he would be paid or not he just needed assistance to fill out the paperwork. However, one insurer did drag the chain, so they then wanted a further $5,000 to write a letter to hurry them up. This is when the brain injured person came to us to ask for advice about if they should pay a further $5,000. Obviously even though they were all group insurance policies and we had not received commissions we assisted them with the unhurrying up of the third claim for free. The Industry Super fund member received a total of about $260,000 of which he lost about $24,000 to the solicitors to fill out the paperwork including $6,000 to cover photocopying, phone calls, postage and other sundries netting him approximately $236,000.
We then charged him $2,200 to advise on how best to ulitise his claim proceeds, but if he had come to us in the first place we would have charged $3,300 and assisted him with the claim. That is a $25,000 difference which is a lot to a person who has received about a quarter of what he needed.
I could understand this if there were issues with the claims, but there was not. Due to a brain injury he just needed assistance with helping fill out the paperwork. Why did he go to a solicitor rather than an insurance adviser or a financial planner? The adds on tv run by solicitors telling him that they will help him.
Why are insurance advisers and financial planners not running the same adds? We are too busy seeing a client, analysing what they have and what the shortfall in needs is, preparing workpapers and numerous quotes to cover all sorts of comparison requirements, writing a Statement of Advice to explain that we are going to receive some income if they accept our recommendation to be covered and if they can’t afford adequate cover, what trade offs and considerations we have made.
Don’t get me wrong I have been writing Statements of Advice for over 20 years and have no problems putting in writing what we have recommended and why and what we will get paid if they accept our recommendations and we can find an insurer who will cover them.
It has just got out of hand in recent years, there is so much more needed than this to cover a whole heap of compliance requirements that add no value to the client or to a quality advisers process.
No system is perfect but continuing to make it more difficult for quality advisers that have passed all sorts of compliance tests is not the answer.
Toughen up on group insurance, toughen up on the unethical adviser, toughen up on solicitors who now see claims as their easy picking grounds and free up the time for quality advisers to do what they have always done ie to look after the financial needs of Australians.

No lawyers at a"particular law firm" have ever done anything good for anyone in the community and are probably the most evil people outside of jail in Australia. There should be a royal commission in to their handling of insurance claims where they get the client to agree to a fee if there is a payout then they settle out of court for a fraction of the total payout because they get their fee anyway.

All theses lawyers do is rip customers off and destroy lives.

Something needs to be done about these crooked lawyers ripping customers off at claim time. I wonder if the big law firms were campaigning for LIF etc so as to get rid of Financial Advisers so they could rip off even more insurance claimants.

I know there are genuine honest solicitors the same as their are genuine honest financial planners who value their reputation in the community and the job they do for their clients, however approximately $25,000 to fill out claim forms for a brain injured super fund member to end up with less then $250,000 is immoral and their is no easy way to complain like there is about a financial planner. He could complain to their association or sue them, but he signed the agreement not understanding how easy claiming is when you have a legitimate claim. If we are going to have all sorts of rules for advisers trying to set up adequate cover we need to have rules for those making their money by ripping people off at claim time because we are too busy abiding by the rules to find time to assist more people.

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