Take-outs from CommBank Insurance Four Corners Report

If you didn’t see the recent Four Corners expose on the Commonwealth Bank’s insurance arm CommInsure, you would have seen and read the ensuing media frenzy. Less than two years after a highly publicised financial planning scandal, CommBank was back in the spotlight. It lead to an apology by the bank’s CEO, selective product upgrades, and a commitment by the bank to independent investigation of ethical concerns raised. The issues aren’t unique to CommInsure. There are several take-outs for consumers. I’d like to draw attention to a couple and consider what clients can do and advisers must do to ‘level the playing field’ for their clients.

Vertical integration among the oligopoly that is the Australian banking system has worked its way into the insurance industry with some interesting results. Product manufacturers are also distributors via an employee sales force who ‘recommend’ exclusively or predominantly their own product.

You go to your bank for a loan which they provide. Your banker diligently suggests you protect this exposure and introduces you a bank adviser. The deal is sweetened by a small discount to your loan rate as a reward for your loyalty. A few points on your loan rate could save you several thousand over a few years. A poor disability policy could cost you much more, as highlighted by the Four Corners report.

Consumers mustn’t let their lending decisions dilute the quality of their personal insurance decisions. A good adviser has two most significant opportunities (and responsibilities) to prove their value to their clients:

1. When underwriting pre-existing health issues at application stage, and

2. Client advocacy at claim stage.

Along with ethical advice, I stake my professional reputation on these. I am ultimately my clients’ advocate in both these vital processes to get the best outcome possible for them. If you have bank insurance through a bank adviser, you must question the degree of vigour applied in these areas.

Issues highlighted by the Four Corners report broadly focus on substandard quality of cover (poor product) and lack of client advocacy (poor advice or no advice). Both product and advice age over time and need to be reviewed. A specialist risk adviser is best placed in this case to do this for their clients. My clients know that, while I have extensive background in the financial services industry, I do not advise on investments or superannuation. I specialise in personal insurance advice. I run my own practice with no alliance or allegiance to any particular product provider in the industry and access to all of them.

If you would like to discuss an unsuccessful claim, or review health exclusions and penalties imposed by your insurance company, please contact me directly at Jery@examinedlife.com.au

To view the Four Corners report click here: http://www.abc.net.au/4corners/stories/2016/03/07/4417757.htm