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Change, not necessarily for the better

Manu and Jacquie had existing life and trauma cover, with a level premium due to end in two years. Their adviser retired and they received a telephone call from their new adviser, Flavio, asking if they would like him to review their insurance. Manu and Jacquie thought this was what usually happened when a new adviser took over, so agreed to the review.

Flavio recommended they change insurers, keep the life cover amount the same but increase and change the trauma policy to a severe trauma policy. Flavio went through the application form with Manu and Jacquie over the telephone and signed the document for them. Manu told Flavio about a back injury he had suffered. Jacquie was particularly concerned that this would not be covered by the new insurer, but Flavio told them not to worry.

Manu and Jacquie were happy with the new insurance until the first annual review when the premium increased. Manu and Jacquie thought the new policy would also have a level premium like their earlier policy. When Manu and Jacquie started asking questions, they discovered that the policy was not a like for like switch and that the trauma cover was quite different.

Manu and Jacquie told Flavio that they wanted their old policy back, it had two years still to run on a level premium and, in their view, the trauma cover was better for their circumstances. Unfortunately, their original insurer was unable to reinstate the policy, so Manu and Jacquie told Flavio that they wanted him to reimburse them the full amount of the premiums they had paid following his recommendations: $6,500. When Flavio declined, Manu and Jacquie referred their complaint to FSCL.



Manu and Jacquie said Flavio did not adequately advise them about the consequences of changing insurers and the policy. They felt seriously let down and considered Flavio was motivated only by his own financial gain and not what was best for them. Although Manu and Jacquie were able to arrange new insurance with a third insurer, Manu’s back injury was now excluded from cover.

Flavio did not accept Manu and Jacquie’s allegations. He said that Manu and Jacquie only wanted a limited scope of advice, that he told them by doing the interview over the telephone he could not provide the level of service he usually would. Flavio considered he had fully explained both the risks and benefits associated with the change he proposed.



When we told Flavio that Manu and Jacquie had referred their complaint back to us, he immediately agreed to the settlement they proposed, being $6,500. However, his financial situation did not allow him to pay the amount immediately and he negotiated repayments split in two amounts over two months.



While Manu and Jacquie were disappointed that Flavio was unable to pay them immediately, they accepted the settlement on the terms he proposed.


Insights for participants

On the information available to us, we were extremely concerned that Flavio had indeed recommended that Manu and Jacquie change insurer for his own financial gain. This seemed to us a probable case of ‘churn’. We could see no evidence that Flavio had analysed Manu and Jacquie’s existing cover, compared it to the new cover and given cogent reasons for the change.