by Russell Hutchinson
Usually this is one of those problems where the claim didn’t pay and they are right not to pay – the insurer is probably correct and the client is still annoyed. The cover you recommended and they declined, due to cost, would have been the one to pay out. You are right, but you’re probably still not happy about it. Such as when the client had a heart attack a few months after declining trauma. Some even phone to ask "Can we still buy that cover you suggested?" and then the story tumbles out. Or maybe it’s a bit more complicated, with the condition in its early stages – you both hope that they won’t get bad enough to claim, but a claim will be there waiting if they need it, just not right now. You may privately agree with the insurer while trying to empathise with the customer.
Then there is the situation where the claim was declined and you’re entirely with the client – you think the insurer should have paid. It doesn’t happen a lot – but it does happen. You think, "How could they?" It is possible they have some knowledge that you don’t? Maybe the client wasn’t being entirely straight with the insurer, but you’ll argue their case, push it for them because you think the insurer has got it wrong, plain and simple. When it happens it may mean you lose faith a bit. It’s a knock for you. If it’s a big claim it can be a real knock out for the client. You may help them argue their case. Often some sort of resolution is possible.
Both of these are about insurers, rather than your advice. Advice problems come in several flavours. I’ve seem a few claims declined because of non-disclosure that the client has blamed on the adviser and vice-versa. That can happen with replacement business.
Then, more recently, I’ve seem claims that would have been paid by another insurer, and weren’t paid by this one. Time was, people assumed all the insurers would take the same view, but exposure like the ABC four corners investigation in Australia is showing consumers that there are sometimes big variations. That’s driving some of the complaints. You might think this is about comparison – and I would have an interest in driving the argument in that direction, I admit – but before it can be about comparison it has to be about scope of service. What did you say you would do for the client?
This is why setting scope and objectives for initial advice engagements and reviews is vital – without that, how does anyone know what kind of advice you were supposed to give? Were you supposed to find the best? The cheapest? The one you can apply for with no tests? The best compromise between price and coverage? The one which is anyone other than the insurer that keeps stuffing up the deductions?
Scope counts. Get clear on that and you will find a way to make everything else work.
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