In 2007, when Anisha was 68 years old, she spoke to an adviser about getting funeral insurance. The adviser contacted an insurer, who put a policy in place for Anisha.
In 2023, when Anisha was 85 years old, Anisha’s family found out that she had paid triple the amount of the policy benefit in insurance premiums over the time that she had the policy. With the help of her daughter-in-law, Mehar, Anisha complained to FSCL.
Dispute
Mehar complained that Anisha had paid $37,000 in premiums for a policy which would only pay $10,000 in funeral cover. Mehar said that the insurer had also since cancelled Anisha’s insurance, which was stressful for Anisha and their family. Mehar explained that it felt like the adviser and the insurer were shifting the blame onto each other, and that no one was taking responsibility.
The adviser explained that at the time, they would have tried to achieve maximum cover for minimum costs, and Anisha had been happy with her insurance for many years. They said that they had no control over the insurer’s decision to cancel Anisha’s insurance.
Review
When FSCL started investigating Anisha’s complaint about the adviser, Anisha already had a complaint about the insurer being looked at through the insurer’s internal complaints process. Eventually the insurer and Anisha reached a settlement with the insurer paying Anisha compensation based on the premiums she’d paid over the years. This went most of the way in resolving Anisha’s complaint about the adviser.
However, Anisha and her family remained hurt and upset by the situation. Anisha had paid a large amount for very little cover and had the policy in place for years which no one noticed. Anisha had been paying abouta quarter of her income on insurance premiums, leaving less money for necessities. Anisha was also very vulnerable, having recently been hospitalised following a fall. This was made more stressful knowing she had no funeral cover in place.
After hearing about the impact on Anisha and her family, the adviser acknowledged that they should have done better. They wrote an excellent letter to Anisha and Mehar saying:
- they should have been more proactive in contacting Anisha and Mehar to assist with the complaint through the insurer’s internal complaints process, and should have recognised earlier that the family was also complaining about the adviser’s service
- that they were updating their processes to avoid the situation arising in the future, including offering more regular reviews to clients and ensuring cover remains fit for purpose
- that they acknowledged the stress the family had suffered and offered to pay $500 in recognition of this.
Resolution
Anisha accepted the adviser’s apology and their offer of $500. This resolved Anisha’s complaint, and we closed our file.
Insights for advisers
Advisers must ensure that the insurance policy continues to meet the client’s needs each time it is renewed. In this case, Anisha’s policy renewed automatically each year if she continued to pay her premiums. The adviser should have turned their mind to the fact that Anisha had paid triple the amount of cover in premiums at the time of renewal.
This case was also a great example of the power of a well-written and genuine apology letter. The adviser’s letter acknowledged they could have done better, and said they were committed to improving their processes, which is often what a consumer needs to hear to resolve their complaint.
