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Adviser pays $30k after relationship 'breaks down'

An insurance adviser has agreed to pay his former client $30,000 after he mistakenly told him that a trauma insurance claim he wanted to submit would not be paid.

Tuesday, April 3rd 2018, 6:00AM 1 Comment

by Susan Edmunds

The client was diagnosed with acoustic neuroma, a type of benign brain tumour, in 2010.

He had held a trauma policy since 2003, with an exclusion for a hearing condition.

When the client told the adviser about his new diagnosis, he said it affected his hearing and he would have to have surgery. He asked whether he would be able to call on his trauma policy.

The adviser said the claim would be turned down because of the hearing exclusion.

The client said he brought it up again several times and was told each time a claim was not possible. In 2013, his condition worsened but, due to the risks of surgery and the fact he had been told he would not get a trauma payout, he decided not to have surgery.

In 2014, he suffered strokes and spoke to his adviser about making a claim but the adviser did not help him.

The client said the adviser then fired him as a client. His wife talked to her own insurance adviser about claiming for the strokes but that was declined. The client then spoke to his original adviser again and submitted a claim, which resulted in a $238,000 payout.

It was also discovered that there was cover for a benign brain tumour but because the full trauma benefit had been paid, there was nothing left for the claim.

The client said his adviser had let him down by not attempting to remove the hearing exclusion, not inquiring whether there was cover for his brain tumour, not researching the nature of it and not advising about the reinstatement options.

He wanted $50,000 compensation.

The adviser argued that the client had not described his condition as a brain tumour. He thought it related to his existing hearing condition.

He said the client had not suffered a financial loss because he had received the full trauma benefit under the policy. Even if a claim had been submitted for the tumour earlier and a payment made, the amount paid for the stroke claim.

The complaint was referred to FSCL, which said it seemed the relationship had broken down in 2014 and worsened from there.

The scheme said it seemed likely the client only told his adviser he had a brain tumour in 2015. It was not reasonable to expect the adviser to research the condition.

The client was not happy with that and said he would have been able to get better benefits with better advice. The parties negotiated a settlement of $30,000.

Tags: FSCL Trauma

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Comments from our readers

On 12 April 2018 at 10:10 am Tash said:
Sadly there is no indication of the actual loss sufferred by the client. Why is $30,000 appropriate? I expect the adviser's PI insurer will want to know that?

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