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Going down swinging

John worked as an insurance adviser. He purchased an income and business protection policy, which operated as a ‘key person’ insurance, specific for small business. In the event of an illness which prevented John from working, John would be paid a portion of his regular monthly income for up to 1 year.

John and his family moved to Australia and he transitioned from selling insurance to being a real estate agent. John continued to pay his insurance premium and now that he was no longer an insurance adviser, he engaged a New Zealand based adviser to manage his key person policy.

In January 2016, after a few years in Australia with no contact with his adviser, John asked his adviser to make the insurer change the nature of the policy from ‘key person’ cover to a standard income protection policy. John maintained that under the original policy wording, if he had held the policy for at least 5 years, it could be modified.

The adviser put John’s request to the insurer. The insurer declined to make any changes to the policy. The insurer considered that John did not meet the eligibility cover of holding the policy for a period of 5 years because, in that time, John was ineligible for policy benefits because he had changed his job and moved countries.

The adviser sought further clarification of the insurer’s position and, after much back and forth, the insurer said that it would not agree to make any changes to the policy, but it would cancel the policy and pay John a full refund of premiums he had paid since he had moved to Australia and become ineligible.

John did not agree to the insurer’s offer and told the adviser to fix it. The adviser told John that he had taken all reasonable steps to put John’s case as strongly as possible, but that if the insurer would not budge, the adviser could not do anything further.

John complained to FSCL about the adviser.



John considered that the adviser had an absolute duty to support and argue for John’s request for changes to be made to his policy. John felt his adviser had breached a duty of care to him and had not provided him a reasonable service because he had not fought hard enough to get the changes. 

John also felt that there were unreasonably long delays between when he contacted John and any response he received from the insurer.   

The adviser said that he had not placed the original policy and that, given John had not been in contact, there had been no opportunity to undergo a review of John’s insurance needs.

The adviser considered that his role was to provide the information on behalf of his client, but it was the insurer’s role to determine whether the policy applied. The adviser felt the insurer was correct to decline John’s request because the policy wording allowed for the policy to be cancelled if John changed the area of operations or the nature of his business. 

The adviser said he had put forward John’s case but that the ultimate decision rested with the insurer, and the insurer was not obliged to change the policy.

The adviser also maintained he had responded to John in a timely manner after the initial complaint.



We were satisfied that the adviser had acted reasonably. We considered that, at law, the adviser had no obligation to advocate strongly on behalf of his client for a variation to the policy.

We accepted that the ultimate decision rested with the insurer, and that John could contact the insurer’s external dispute resolution scheme if he wished to challenge the insurer’s decision.

We were satisfied that the adviser had put forward John’s case in the best light and that, although unsuccessful, that was not the adviser’s fault.

We were also satisfied that the adviser had communicated regularly and clearly with John, and had that he had worked well to obtain a reasonable and fair settlement for John from the insurer.



We issued a preliminary view outlining that the adviser had provided a reasonable service to John. We explained that John’s dispute about the insurer’s decision and the policy wording could be furthered directly with the insurer or its external dispute resolution scheme. We also encouraged John to accept the insurer’s offer to refund his lost premiums as this was a fair deal in the circumstances. John did not accept our view, but discontinued his complaint.


Insights for consumers

Your adviser is able to assist you in the claims process and be the conduit of information between you and the insurer, but it is the insurer that will make the ultimate claims decision. Insurers can make commercial decisions to offer insurance or amend policies as they see fit.