UP FRONT | NEWS
News story about declined claim divides advice industry Ailepata Ailepata made news last month. The 43-year-old from South Auckland was turned down for a $100,000 claim for gastric cancer because he had been switched to a new insurer, with less cover, and he had not disclosed his “impaired glucose tolerance”. Some were quick to decry advisers looking to make money from vulnerable clients. Adviser coach Tony Vidler described the actions of the NZ Home Loans adviser who shifted Ailepata from a Westpac policy to a Fidelity Life one, with half the amount of trauma cover, as a “shocker”. But insurance adviser Katrina Church said there was not enough information to condemn the advice process.
“Sadly, guys, this is all about the client understanding their obligation about their disclosure requirements. If they had disclosed the high sugars he may not have been accepted and still be insured at Westpac,” she wrote in reply to Vidler’s LinkedIn post. Vidler said this sounded like she was blaming the client. “If you are publicly condoning replacement, where the client ends up with less cover and a higher premium and was only minimally involved in completing the application form under the pretext of ‘better service’ and a ‘better’ deal, you are contributing to the problem the industry faces.” Both Church and Vidler, however, agreed that the issue of non-disclosure was a pressing one. Vidler said:
Adviser stops scam and saves client $60,000
An adviser who saved his client from losing $60,000 to a scam says it shows his systems are working. Craig Fraser, of VIP Financial in Timaru, said his client, who is in her mid-70s, requested a withdrawal from her DIMS account. She made one request, which was processed, but two weeks later she requested another $60,000. “That set all sorts of alarm bells ringing,” Fraser said. While Fraser said he “felt terrible” pushing her about why she wanted the money, he discovered she was trying to help a friend whom she had never met. The person had been emailing her for a couple of months, and there had been emails from someone claiming to be the friend’s son at boarding school in the United States. He told the client he had an obligation to her family and asked her to send the emails they had traded. The woman lost $30,000 but was relieved not to have lost more. Fraser said he had not been able to persuade her to report the fraud but he said it showed his systems, including a vulnerable client policy, were working. In a case considered by IFSO this year, a woman complained that an adviser did not stop her brother withdrawing a total of $189,100 from a family trust’s bank account. She said the adviser had a duty of care to question the reason for the withdrawals but IFSO said that was not necessary because the man was authorised to make withdrawal requests.
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“Clients often tell you everything they think you want to know then later say ‘I didn’t think that would matter’.” Clients were in a poor position to judge what would be important to an insurer, he said, and it was the adviser’s job to step up. Church said there was not enough in the articles written about the case, adding: “There are many ways an adviser can lower the level of nondisclosure – ensuring the client reads their application post-submission and confirms this prior to issue, obtain medical notes from the outset, obtain ACC claims histories.” Many people did not understand what was in their medical notes, she said, and sometimes GPs had added information that clients did not know was there.
Sale of AMP Life 'an absolute travesty'
Parliament’s Finance and Expenditure Committee has been told the way the sale of AMP Life has been handled is an “absolute travesty”. The Reserve Bank has now finalised the sale of AMP Life to Resolution Life, but not before a petition was heard in Parliament on July 1 objecting to the deal. AMP policyholder Andrew Body’s petition had asked for the House to review the Insurance (Prudential Supervision) Act to ensure policyholders are treated fairly when a life insurer is sold. Body told the committee: “The problem I have is I haven’t been consulted. All I know about the purchaser is it’s a Bermudan tax-haven company apparently controlled by a financial entrepreneur from the UK.” A trust has been set up to provide security but Body said it was not possible for the beneficiaries of that trust – the policyholders – to access information about it. The Financial Markets Authority (FMA) should have been required to approve the transaction, he said. Reserve Bank deputy governor Geoff Bascand said it was only the ultimate ownership of the company that was changing and AMP Life was still continuing as the insurer. FMA director of regulation Liam Mason said his organisation did not have a role in the sale of life insurance companies, but if it had the legislation it would look at transactions like this. Resolution Life NZ chief executive Therese Singleton said the Reserve Bank had been “thoroughly diligent” in its oversight of the transaction.
