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The dual-cover duel

Khalil had income protection cover paid for by his employer, which was administered through an insurance broking firm. Khalil moved to a new job and kept the same policy in place, but paid the premiums himself. The policy continued to be administered by the broking firm (the original policy).

Khalil then moved to another new job, which came with the benefit of an income protection policy (the new policy) which was more extensive than the original policy.

Khalil knew he had the original policy, but took on the new policy thinking that he could be paid benefits under both policies. However, Khalil later discovered that the policies could not co-exist. He had paid approximately $3,000 in premiums towards the original policy, under which he could receive no benefits. Khalil cancelled the original policy.

Khalil also discovered that both policies were administered by the same broking firm.



Khalil said that the broking firm had a responsibility to put him on notice that he was paying premiums for a policy he could derive no benefit from. He wanted the broking firm to pay him the $3,000 in premiums he had paid towards the original policy after he had taken out the new policy. When the broking firm refused to pay, Khalil complained to FSCL.


The broking firm’s view

The broking firm said that for privacy reasons, it would not cross check any policies held by individuals under different group employment insurance schemes (including where a customer had continued a policy after ceasing employment). The broking firm said it was not required to cross check the policies, and had no way of knowing to do so, unless the customer actively raised the issue of having two policies in place.

In addition, the broking firm said that with employee group policies, its advisers do not look at the individual needs of each employee covered by the group policy and give them personal advice. The employer is the actual client of the broking firm, whose employees obtain the benefit of a generic policy applying to all employees.

Lastly, the broking firm said Khalil had received the full terms and conditions of both policies and could have identified the duplication in cover.



We asked the broking firm whether it had approached the original insurer to discuss a refund of the $3,000 premiums. If the original insurer was never on risk after Khalil had taken out the new policy, it may be prepared to refund the $3,000 in premiums. Unfortunately, the insurer did not agree to refund the premium.

The broking firm acknowledged that unfortunately Khalil had duplicate cover in place and that he had suffered a loss. However, it did not consider it was responsible for causing the loss.

In an attempt to resolve the complaint, the broking firm offered to pay Khalil $1,000 in full and final settlement of his complaint.



Khalil accepted the $1,000 and the complaint was resolved.


Key insight for complainants

It is not uncommon for us to be contacted by consumers who have duplicate insurance cover and have paid premiums towards policies under which they cannot claim benefits. It is important that consumers regularly review the cover they have in place and, if they are unsure, seek professional advice.