'Mediators always side with clients'

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A case in which an insurance broker was criticised for not conducting a full review of a client’s policy at renewal is being held up as a warning to other advisers.

Thursday, November 8th 2018, 6:00AM 2 Comments

The issue arose when Newpark General took over the fire and general clients of another adviser.

A year before that transfer, the previous adviser had reviewed the clients’ cover and downgraded it to a policy that excluded their swimming pool.

Newpark General then renewed the policy on the same terms, with a notice to the client including a summary of their cover and policy wordings, and a schedule reflecting benefits, insured risks and values.

This was sent with the policy wording and an invoice and note asking the client to advise Newpark if they wanted to change anything.

The client then suffered earthquake damage and claimed for a swimming pool repair.

The insurer declined the claim.

“I think they either simply forgot it wasn’t insured, or the original adviser never told them the cover was removed,” said adviser Herman Roodt.

“They then took us to the DRS FSCL for mediation which was also attended by the original adviser and his PI insurer’s representative. This adviser’s PI insurer immediately attacked me saying we should have done a full review of covers, which I rejected as no advice was given, and with domestic F&G the norm is not to review domestic cover personally with clients. It is just not viable to do personal reviews with all domestic clients. These renewals are all done via electronic/paper correspondence."

He said, after he left the meeting, the original adviser accepted his mistake and offered to pay 50 per cent of the $34,000 claim.

The client has now gone to the Disputes Tribunal and Roodt said he would be attending a telephone conciliation meeting next month for the remaining $15,000.

He said advisers often felt that mediators acted with bias towards a client – and a similar thing could happen to those dealing in life policies.

“The mediator always believes the bid bag wolf insurance adviser (or it’s company) has deep pockets and unlimited PI insurance and the poor client who never did anything wrong should be compensated irrespective of whether it’s right or not."

Tags: complaints

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