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AON accused of churning insurance customers

AON has written to insurance customers suggesting they should switch their cover to Sovereign, provoking outcries that this is a "blatant" case of churning.

Tuesday, August 3rd 2010, 8:03AM 11 Comments

by Jenha White

The letter from AON sent in May, says it will be contacting all of those clients who are not insured with one of its preferred insurers and reviewing their covers.

"We're writing to advise you that an agreement has already been reached between AON and Sovereign Assurance, which gives you the opportunity to transfer your insurance cover to Sovereign.

"As one of our new panel of providers, Sovereign is offering to transfer your cover on a like for like basis, without the need for any medical questions or examinations."

Newpark Financial Services managing director Darren Gannon says he finds this disappointing.

"To hear of two big corporates engage in churning is shocking, we've had two and a half years of hearing about advisers churning business and the situation has slowly been improving and there has been a lot of talk from the ISI about it.

"With Sovereign as a member of the ISI it will be interesting to see what the Association does about this."

GoodReturns could not reach the ISI for comment and AON was also unavailable.

Scott Wilson from Asset Wise is also "disgusted at this blatant attempt at churn".

"It may not be best for the client and you can bet your bottom dollar a lot of clients get caught out," says Wilson.

However he believes AONs agency wording is such that it can do what it likes with the clients of brokers and technically nothing is illegal.

Sovereign general manager product and marketing David Drillien says he thinks the ISI Business Replacement Rules and Reinstatement guidelines are about good disclosure, not about suppressing competition between insurance companies.

"We believe our involvement is entirely appropriate, above board and consistent with ISI policy."

He believes there are always situations where better offers and policies are around and that it is perfectly reasonable for clients to shift insurance and to have advisers recommend that switch.

"I don't accept that the ISI policy is about discouraging good advice to change policies, it's about good disclosure to clients."

The ISI has always said it is working on the business replacement policy because there have been a number of unfortunate cases where benefits under a replaced policy would have triggered a successful claim, but the new one did not.

The AON letter looks at whether policy benefits are the same and says the new Sovereign policy should at least offer the same level of cover as a clients existing policy and the adviser will take the client through a comparison to ensure they are aware of any differences.

"However, because of Sovereign's size and reputation for product excellence and innovation, your new policy is likely to have enhanced benefits over what you currently enjoy, this may also be an opportune time to review your insurance coverage," says the letter.

"We encourage you to take advantage of this opportunity to enhance your protection plan."

 

 

Jenha is a TPL staff reporter. jenha@tarawera.co.nz

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Comments from our readers

On 3 August 2010 at 11:40 am Anon said:
I would suggest any comments regarding Sovereign remain anonymous unless you want your agency cancelled, as has happenened in the past.
On 5 August 2010 at 11:15 am Jim Dowsett said:
Looks like one rule for the big boys and a different one for us. I'm not a churner but looking at this nonsense would make a decision to become one easier. Very disappointing.
On 5 August 2010 at 11:20 am Anon2 said:
Yes and as it's a clean swap, there won't be an upfront commission, and the premium to the client will be cheaper. Yeah right, have another Tui!
On 5 August 2010 at 11:21 am Anon2 said:
Yes and as it's a clean swap, there won't be an upfront commission, and the premium to the client will be cheaper. Yeah right, have another Tui!
On 5 August 2010 at 11:25 am Jan said:
What can be said about soveriegn and aon in bed together.
I suspect there will be Brokers all over the country looking to 'vote with their feet' on this one.
We also use other companies out there for general insurance referrals, hey try Crombie Lockwood they are streets ahead of what Aon can do.
I have no concerns about having an agency canceled with soveriegn as we thew them out 3 years ago because they simply weren't competitive enough on price.
Aon have made it pretty clear they have no need nor respect us Brokers
On 5 August 2010 at 11:30 am Anon said:
So it's OK for the 2000kg gorilla to compete and screw the opposition, but not Ok for the adviser! Talk about double standards. How many times are the other insurers going to put up with these bully boy tactics from the 2000kg gorilla?
On 5 August 2010 at 11:42 am Anon said:
Having read the story, I called AON - Stylecover and it was clarified that this does not effect any of my clients.

If unsure I suggest others do the same.
On 5 August 2010 at 11:47 am Alan Burns said:
I look forward to ISIs position on this.Their largest member is openly flouting their own regulations. This is a real test of credibility for the ISI. Just because your the largest insurer it doesnt make your policies the best. AONs professionalism is also questionable
On 5 August 2010 at 6:36 pm Tui said:
Well maybe we should ask Vance what he thinks? I am not too interested in the value of ISI presently... is anyone else, seriously???
On 11 August 2010 at 9:32 pm Jim Dowsett said:
If it looks like a duck, quacks like a duck then surely it's a .....?
On 12 August 2010 at 7:34 am Darcy Sollitt said:
ISI are responsible for first allowing this to happen when Mr Sole was there. Therefore ISI will do nothing as they are funded by YES that is right......along with other companies.

If this goes ahead how many cases of Non Disclosure will there be. We all know that SOME brokers are useless in filling in and helping fill forms in.

What ever happens happens and Sovereign are too powerful and have too much money to fight. So guys the best thing you can do is twist all your business away from Sovereign and AON and cancel your agencies.

True none of you will do that as long as they line your pockets. SO WHO ARE THE LOSERS??? Clients as usual....
Commenting is closed

 

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