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“Replacement cover; replacement knee”.

The plan

Andy and Sarah had existing health and life insurance cover with insurance company A, Health and Life Insurance Limited.

Andy met with Ben (an insurance adviser) in September 2014 to discuss his and Sarah’s health and life insurance cover, with the view that they could get the same level of cover with another company for a lower premium. Ben went through Andy and Sarah’s current financial position and analysed their insurance needs, and then prepared a plan for the way forward.

Part of the plan was for Andy and Sarah to change their life cover to insurance company B, Insurance for Life Limited, and their health cover to insurance company C, Healthy Insurance Limited.

Andy’s knee

Around about the same time Andy met with Ben, Andy had been to see his doctor about a problem with his knee. This was a minor issue for Andy and he did not tell Ben about this.

Upon receiving Andy and Sarah’s application for cover, Insurance for Life Limited obtained a copy of their medical records. The medical records included reference to Andy’s recent trip to the doctor about his knee. Both Insurance for Life Limited and Healthy Insurance Limited provided Andy and Sarah with cover, but both companies excluded cover for any claims in relation to Andy’s knee.

However, by this time, Andy and Sarah had already cancelled their existing policy with Health and Life Insurance Limited. Andy would have been covered for claims in relation to his knee under the original Health and Life Insurance Limited policy.

It also turned out that the problem with Andy’s knee was more serious than he thought and he needed to have knee replacement surgery costing around $20,000. However, Andy discovered that he had no insurance cover for this.

The complaint

Andy went to see another insurance adviser, George, about the issue. George was able to reinstate the original Health and Life Insurance Limited policy, but cover under that policy excluded claims in relation to Andy’s knee.

Andy complained that Ben could reasonably have been aware of the issue with the cover in relation to Andy’s knee and should not have advised Andy and Sarah to cancel the Health and Life Insurance policy before ensuring the new policy provided adequate cover.

Andy also had to back pay the premiums to Health and Life Insurance Limited in order to get his old policy reinstated. Andy said he had paid around $4,000 as a ‘double up’ payment towards health and life insurance premiums.

When Ben declined to pay Andy any compensation, Andy complained to FSCL.


When we started investigating the complaint, it became clear that there were a number of ‘grey’ aspects to the complaint. These included whether Ben had acted as a prudent adviser, and whether Andy should have disclosed more information to Ben about his knee.


Our case manager suggested to the parties that they attend a conciliation conference facilitated by us. The parties agreed to a conciliation conference and a settlement was reached with no admission of liability from either party, that Ben would make payment to Andy and Sarah of $13,250, in full and final settlement of the complaint.