Time for insurers to make commitments
With the Federal Government having backed a Senate Committee expanding its scope to closely examine allegations against Comminsure, a push has re-emerged for a regime to require insurers to commit to delivering on their product commitments.
The commitment regime was raised by Money Management and its specialist columnist, Col Fullagar, in March last year just weeks out from the findings of the Trowbridge Report and the allegations levelled against Comminsure have prompted discussion of such a regime again.
At the time of the Trowbridge Report, Fullagar said that while much attention was being directed towards advisers, just as much attention needs to be directed towards the conduct of the other major parties in the equation — the insurers.
Fullagar said that if insurers were serious about wanting to overcome negative perceptions of the industry, it might pay dividends for them to focus attention on their own practices as well as those of advisers "because it is clearly the case that even if brilliant advice is implemented without any actual or perceived commission bias and the insurance remains in place, the public's perception of the financial services industry can still be decimated if the insurer acts in a way that is untoward and/or unprofessional".
Twelve months later, Fullagar said recent events had only served to reinforce his belief that the chief executives of insurance companies should be prepared to sign up to replacing "insurer claims" with "insurer commitments".
Fullagar noted insurer claims such as "all matters are handled expertly, sensitively and as quickly as possible"; and "You can be sure that we will do everything ¬. to make it as easy as possible for you."
However, he said the problem with such "claims" was that suffered terminally from being mothering statements that were easy to say, difficult to deliver, and too often, not the reality.
"They are not believed, not trusted and may as well not be said," he said.
Fullagar said that if insurers were to make commitments rather than claims, then such commitments would need to be more specific and identify precisely policy holders and advisers could expect to be delivered.
He cited Fortnum Financial Group's approach to selecting insurers for inclusion on its approved product list (APL) and the manner in which insurance companies could gain "preferred" status by living up to their commitments in terms of claims handling.
Fortnum's Joel Taylor told Money Management that he believed the operation of the APL had provided Fortnum with the leverage to have a two-way conversation with insurers at claims time and to counter some of the arbitrary decisions that might be made.
"It helps engender a proper process," he said.
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