Dispute Prompts Adviser to Refund Client’s Premiums

Financial advisers should take care to disclose everything a client tells them about prior medical conditions when writing insurance, says ombudsman Financial Services Complaints Limited.

Its prompt follows the case of a client who was declined a claim for eye surgery due to apparent non-disclosure.

The client, ‘Greg’, spoke with an adviser about health insurance in 2020 and declared he’d had a medical procedure on one of his eyes. The adviser completed the form for him and provided one insurer option which Greg accepted.

When the client submitted a claim to the insurer for eye surgery it was declined due to the previous eye procedure not being disclosed on his application form. Greg complained to FSCL that the adviser had failed to adequately disclose his medical history to the insurer.

The adviser said she could not recall Greg mentioning the eye surgery and had no notes from their conversation.

Following a review by FSCL, the adviser settled the complaint by refunding Greg’s premiums totalling $2,250.

The FSCL states that advisers should ensure they explain the duty of disclosure to clients, and that clients have adequate opportunity to disclose their prior history.

“This case was also a good example of the benefits of an early settlement – it not only leads to greater client satisfaction, but also saves time and money in the complaints process,” says FSCL.

Read the full case history here.