Choosi responds to adviser concerns
Insurance comparison website Choosi has responded to concerns raised by a group of financial advisers about its marketing strategy and service to consumers, claiming its approach was transparent and clearly disclosed.
A recent Money Management article outlined some of the concerns raised, such as Choosi's relationship with life insurance brands owned by Hollard Financial Services, its parent company.
Furthermore, advisers who spoke to Choosi representatives were worried that the company might discourage consumers from taking up non-Hollard brands such as AMP, BT Life, AIA, CommInsure and others, available only through its adviser service called XLife.
However, managing director of Choosi David Rees said the nature of the company's service comprises two distinct components — direct and advised — and that this is clearly disclosed throughout Choosi's website, not just its Financial Services Guide.
"Any consumer who calls Choosi or requests a call from Choosi is given the choice up front to either compare quotes from a stated range of insurance brands, which we can arrange directly, or to be transferred to the Choosi adviser service," Rees said. He said the Choosi adviser service could provide quotes on a greater range of life and income protection products than Choosi can directly and that this was re-stated in its sales scripting.
At no stage does Choosi purport to compare the entire market, or mislead consumers in any way as to the range of insurance brands available and by what means they are available, Rees said.
In December 2012, the Australian Securities and Investments Commission (ASIC) warned insurance comparison websites about the need to provide accurate information.
"Some of the websites only compare a limited number of brands/products from a limited number of providers," ASIC stated. "This may not be clearly disclosed, which creates the impression that the extent of comparison is much broader than it actually is."
The regulator also noted there was insufficient disclosure regarding relationships between website operators and the issuers of the insurance brands being compared.
However, Rees said Choosi maintained an open dialogue with the regulator.
"As part of our commitment to best practice, we have actively maintained open dialogue with ASIC, who have reviewed our practices and website, and we are confident that our disclosures are open, clear and in no way misleading our consumers," he said.
The LinkedIn group, headed by risk adviser Aaron Zelman, also raised concerns about the brand ratings displayed on Choosi's website. Life companies are rated on four areas (level of cover, value for money, making a claim and customer communications), with Hollard-owned brands faring better than any other of the 15 brands.
"All ratings are from genuine customers of the rated insurance brands and our website is open to customers of all insurance brands in the market, not just customers of the brands we promote; nor is it only open to Choosi customers to leave posts," Rees said.
Furthermore, Choosi has some ‘prudent' housekeeping rules with respect to the posting of rating, which he said were clearly stated as "Terms and Conditions" which have to be read and acknowledged, he said.
"Choosi does not control which brands rate higher than others for the various categories," Rees added.
Recommended for you
Policy and advocacy specialist Benjamin Marshan has left the Council of Australian Life Insurers after less than a year, having joined in March from the Financial Planning Association of Australia.
The declining volume of risk advisers meant KPMG has found a rising lapse rate for insurance policies arranged by independent financial advisers, particularly in the TPD and death cover space.
The Life Insurance Code of Practice has transferred from the Financial Services Council to the Council of Australian Life Insurers.
The firm has announced it will no longer be writing new life insurance policies in the retail advised and corporate group insurance channels, citing a declining market and risk adviser numbers.
