TO: economics.sen@aph.gov.au
ATTENTION: The Senate Economics Committee
SUBJECT: Inquiry into the scrutiny of financial advice – A response to the call for submissions on the life insurance industry.
INTRODUCTION
I have been in the industry for 22 years and service over 300 Australian families.
I am a member of the following association N/A
I wanted to share this scenario with you as it is critical that the Senate Economic Committee knows why the proposed Life Insurance Framework has been engineered by Banks and Life Insurance Companies to the detriment of customers.
ACTUAL CUSTOMER SCENARIO Here is an example of when the action or
inaction of Life Insurer’s and their associated staff members have contributed to a poor outcome for the client until, I, the adviser, got involved.
Client was initially told by her bank that she would not be able to claim as her condition was not server enough, even though she had just been diagnosed with breast cancer. At the time I was not her adviser.
Her policy was with a bank planner who obviously had no experience and did not have her best interest at heart.
She contacted me and after that discussion she assigned me as her adviser, the 1st claim payment for her income protection and
business expenses was made within 30 days of me been assigned. SCENARIO DETAILS
Month / Year 17 September 2014 Insurer Asteron
Department Claims Policy Number (client name not
provided) These are the specific actions or inactions of insurer staff members that were either inappropriate, not following policy terms or not in line with service level
agreements (no names provided).
When my client called the bank adviser she was told not to bother claiming as income protection and business expenses would not be paid for a breast cancer claim!!
Obviously this adviser has no experience, if you are unsure if a claim will be paid what should happen is that a claim should be lodged the claims team will make a decision.
This is how the aforementioned situation had lead to an adverse affect on my client.
My client was devastated, she has been paying for insurance for years so she that she could have peace of mind if she ever got ill, because of this scenario she was under the impression that she would potentially loose her business and would not be in a financial position to concentrate on her recovery.
achieve either a favourable resolution or an appropriate outcome that was in my client’s best interest.
experience and knowledge to reassure my clients that we will do our best to get a positive outcome for them through their time of need, this is when what we do actually means something, if we let our clients down when they have a claim why would we be in this industry.
This case was no different, I listened to her asked some pertinent questions to establish what her prognosis was, once I had done this I called the claims team at Asteron, explained the situation in as much detail as possible, they were extremely helpful. A call was made to my client the same day, a claims application was
completed on the phone, and the process was underway.
Anonymous supporting evidence.
(Remember to remove your client’s name from any correspondence you send as part of your submission).
This is a letter the client loaded onto a dental industry forum
Dear Colleague,
Like everyone else I have absolutely hated paying the premium for my income protection and business expenses insurance, I had always thought I never use this why on earth am I paying so much money. On the 17th September 2014 my life changed dramatically when I was diagnosed with breast cancer. I would like to share my experience with you because having this insurance has truly been a life changer.
I was chatting to the husband of a patient of mine, during treatment, who I knew had recently had breast cancer, he told me her story and she was someone close to me in age, we had children who were close in age and I generally related to her, so I asked my receptionist to make an appointment for a Breastscreen on that day. Little did I know this conversation may well have saved my life! I was diagnosed with breast cancer following a diagnostic mammogram through Breastscreen, I had no symptoms and could not feel the 6cm cancer that I have. So for any woman over the age of 40 Breastscreen is free and not just for women over the age of 50. If you are a male please encourage every woman over 40 you know to have a Breastscreen, and for every woman over 40 please don’t put it off another day!
I was so shocked, appointments were so frequent, and there was so much to cope with emotionally. Dentistry is a career where you have to deal with people all day. I was in no frame of mind to treat people; I had no time because appointments ruled my life, I needed to attend whenever an appointment was offered to me. For many years I had never considered myself, work was always my number 1 priority; it was finally time to put myself and my own health as number 1 priority. My insurance cover has
allowed me to do this.
My income protection and business expense insurance has given me peace of mind and had a significant impact on my financial position. I don’t know how I would have coped without it. Essentially I was able to walk away from my practice on the day of diagnosis and take care of myself. I know there are many people who have to work through chemotherapy and who it is good to have that routine. I am certainly not one of those people, I am still coming to terms with the fact that I am seriously “sick”, in my working career of 25 years I had about 5 sick days! I was able to take time to find a locum to help me out and still maintain my staffing as it was. I employ 5
non-producing staff and could not imagine having had to let them all go. My business expense insurance means I am able to continue to pay them all and maintain a working staff for my return, or to be able to sell as a working concern if that is what I choose to do.
So the take home messages from my experience: 1. Every woman over the age of 40 is eligible for a
free Breastscreen mammogram and as practitioners I would encourage you all to encourage your patients and friends to do this! 2. Never be without income protection and business
expense insurance. In our family I was the primary income earner and we would have been making some serious lifestyle changes without this insurance. At the completion of my treatment, approximately 12 months after diagnosis my completed payout will be in the vicinity of $500 000, no one would ever be self-insured for that. 3. Consider the peace of mind that this sort of cover
gives you to breathe at the worst time of your life- it is invaluable when everything around you is crashing in!
4. Get to know your insurance agent I would suggest on the anniversary of your premium don’t just pay the bill, have a conversation with them and make sure your policy meets your needs. Check they are the person who you want watching your back at the worst time of your life.
I cannot recommend Chris Earle highly enough, he wasn’t my agent when I was diagnosed but it quickly became apparent that the representative I had wasn’t giving me the service I needed or deserved. Chris has been outstanding and in many ways just as important as my medical team, making
sure I don’t have to focus on income during this time.
My husband has recently swapped his insurance cover knowing the peace of mind he will have after Chris’s wonderful care of me.
5. Income protection/business expense insurance allows you to make choices, I could not recommend it highly enough to every practitioner I know! 6. Make the most of every day!
The proposed Life Insurance Framework changes have been designed by the banks and insurance companies to maximise their profits while simultaneously crippling or removing independent Financial Planners at the expense of customers.
Unfortunately my scenario is not an isolated event, and does not relate to any one insurer but is indicative of a more systemic problem within the industry.
The proposed Life Insurance Framework only serves to undermine customer interests while the banks and insurers continue to exert greater power on the industry in the following ways:
1. Swallowing up consumers with vertically integrated advice channels, and heavily promote their in-house manufactured products through their owned distribution network.
2. Increase their “Direct Life Insurance” policy sales which generally have 50+% higher premiums and come riddled with extensive exclusions, and have higher lapse rates as customers cannot afford the extortionate premiums! 3. Dramatically decrease claims payments. For years Life insurers have been
trying to cut out advisers assisting clients with their claims so that the insurers are not held accountable for their actions, inappropriate process or outcomes that are outside policy terms or not within the client rights. This causes extreme financially crippling scenarios for Australian families, which is in the eyes of the insurer will be their best victory yet, having customers representing themselves when they have bought a product through either their “Direct Life Insurance” sales channel or though one of their own vertically integrated businesses which they control!
“If the proposed framework is passed, it will be Christmas in July for the Executives of Banks and Life Insurance Companies at the cost of Australian families.” Profits and Executive bonuses will explode while the unsuspecting hard working
The evidence is loud and clear, to everyone except the decision makers that the proposed Life Insurance Framework dramatically disadvantages consumers. It is critical that it is stopped immediately until there is an in-depth public senate enquiry into the Life Insurance Sector.
