14th Feb 2018
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Insurers asked to drop rules that protect profits
Author: Olga Galacho
Insurers asked to stop rorting

Valentine’s Day was the launch pad for the latest consumer campaign targeting unfair insurance tactics with the catchcry “show a little love”.

Against a backdrop of throbbing hearts, the Consumer Action Law Centre (CALC) yesterday launched a “dating video” on fairinsurance.com.au, calling on insurers to dump unfair policies.

Australians who believe their insurance claims have been unfairly denied and would like redress are invited to submit their experiences to CALC.

The advocacy group is pushing for insurers to not be exempt from unfair contract terms laws with which other sectors must comply. The organisation yesterday also released a report titled DENIED, which it says details how “shockingly” insurance companies treat some policy-holders.

Insurers are being asked to consider if policy clauses go too far in their favour and whether some of them cause bigger headaches than is warranted.

Meanwhile, the campaign features three actors who humorously discuss how their hearts were broken by  their “love interests”, which are spoofs of actual insurance companies.

In a short video, a woman tells of once dating a royal (RACV) whose tastes were too expensive; a man says his ex, Amy (AAMI), left him out in the cold when he was most vulnerable; and another recounts how he was dropped by the love of his life, Ally (Allianz), over a pre-existing medical condition.

Tongue firmly in cheek, CALC Chief Executive Gerard Brody said yesterday that even though insurance companies had a bad reputation, he thought their hearts were in the right place”.

“So today, for Valentine’s Day, we’re reaching out to the CEOs of all the major insurance companies to show us some love,” he said.

“Flowers, candy and fluffy toys are arriving at CEOs’ desks to encourage some love from the industry towards its customers.’’

While acknowledging that the Federal Government wanted the unfair terms laws extended to insurers, Mr Brody said “the industry could, and should, act now”.

“Many people lose out on their insurance because of unfair contract terms. And insurers are facing a big trust problem with Australians,” he said.

“People are getting huge shocks when their insurance claims are denied and yet insurers are the only industry who can legally include unfair contract terms in their contracts. Insurers should apply a fairness test to all terms in their contracts now.

“Every other industry must ensure that their terms and conditions protect legitimate business interests only, and that their own customers can understand the contracts. There’s no reason insurers should get special treatment.”

CALC said “it appeared to be very difficult for an individual to get a good result without engaging a lawyer” when they contested an insurer’s decision.

“A fair contracts regime for insurance is overdue. If insurers stick to the same rules as everyone else, it will even the playing field and give Australians a better chance of a fair outcome when they need it most,” the organisation said.

Opinion: Lawless insurance companies fail community expectations

Each time YourLifeChoices publishes an article about insurance companies’ poor treatment of policy-holders, we receive dozens of responses from members who have been conned into buying cover that falls short of expectations.

In the words of one of our members: “It is appalling that people under stress … are subjected to what is basically abuse and bullying …  and made to feel like a criminal simply because you believed someone who had sold you a product that was supposed to assist you in your time of need.”

No doubt the Financial Ombudsman Service (FOS), who is supposed to mediate insurance disputes, hears many similar stories each year. In fact, in its latest annual review it reported that complaints about general insurance had surged 26 per cent to 8100.

If, from a small population such as Australia’s, more than 8000 citizens a year feel they have been wronged by the very companies they pay to take care of them when the chips are down, then there is something very broken with the system.

The Consumer Action Law Centre’s (CALC) call out to the sector to be the “bigger person” and lift its own game is noble, but is it enough?

The advocacy group should be applauded for shining a light on the discrepancy that exempts insurers from laws on unfair contract terms. 

And CALC’s gimmicky campaign off the back of Valentine’s Day certainly was eye-catching. But I won’t be waiting around expecting insurers to become introspective about whether making outrageous profits is wrong.

Let’s hope that the Government acts sooner rather than later to implement reforms to the sector as it proposes. And at the very least, the Royal Commission into the Banking and Financial Services sector also ought to use its wide powers to make insurers explain how their policies are fair when roughly one in three claims are rejected.

Yesterday, CALC senior policy officer Susan Quinn told YourLifeChoices the insurance sector was not living up to community expectations.

“Even if the insurers are not breaking the law, to us it is clear that the law has to change,” Ms Quinn said.

A starting point would be to force insurers to abide by the same rules other sectors do and not write unfair contract terms which put the interests of consumers way below those of the company.

“In Australia today, protections for people with insurance are weak and hard to access,” says CALC. This must change soon.

Has your claim ever been rejected by an insurer? Do you think it is worthwhile buying insurance cover? Have you ever been delighted by exceptional service from an insurer?

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    COMMENTS

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    Adrianus
    15th Feb 2018
    10:07am
    The evidence is clear. Insurance companies a very well supported on the ASX because of their high yields. Obviously the claims departments are not in sync with their actuaries.
    MICK
    15th Feb 2018
    8:13pm
    It is objectionable when insurance companies use their bottomless bank accounts to steamroll people who have a GENUINE claim. This is where governments should be legislating but sadly governments in the western world are controlled by business. So the little person often gets done and the only way to get justice is using the media if it has interest in your story.
    ABout time governments got out of bed with insurance companies and did what they were elected to do: work for the citizens of the country.
    elephants
    15th Feb 2018
    12:17pm
    Oh my pet hate .The government wont do anything .We lost all in the 2011 floods .Bill Shorten came to Ipswich giving us promisez never kept.I sent an email to him NO REPLY. I ring arond every yr. To obtain quotes. .. some are $6,000.00 different some even more. We are paying $3,500.00 a yr on the pension, Talking to many pensioner 1 lady said 1 company wanted $12.000.00 to insure hers she is uninsured as many other pensioners. All the monies that were donated the government here took in interest for their own means a disgrace.
    We my first husbane passed away at 29yrs.old The insurance company tried sssooooo many ways to get out off paying I had a 6yr old 4yr.old & a 4month old baby at the time What they put me through was just terrible.
    SO MANY OTHER PEOPLE HAVE TOLD US SOME DISGRACEFUL STORIES. At a meeting in 2011 the insurance council head came he sat there for about 30min. got up (yes people were angry) what did he do after a few words he walked out never to return to follow meetings. These people Bill Shorten ,the head of insurances & others are paid the big bucks to sit on their throwns but when the crunch comes do thay do the right thing........INSURANCE IS A DAMED IF YOU DO & DAMED IF YOU DON'T THEY HOLD US TO RANSOM.
    Knows-a-lot
    15th Feb 2018
    1:20pm
    Don't blame Shorten and the ALP. Blame Turdball and his Lieberals. The insurance-industry scumbags are his mates, after all.
    Anonymous
    15th Feb 2018
    3:59pm
    Oh RIght

    You didnt take flood protection to save on your premium and expect the insurance company to then pay-out

    That's rorting

    Knows -nothing as usual spews his marxist hate and blames the Liberals and capitalism for everything - even ones own stupidity or laziness
    Anonymous
    15th Feb 2018
    6:02pm
    Knows-a-lot, what a ridiculous comment! Next you will blame Turnbull (and Abbott) for the pink batts insulation deaths! Why cant you comment objectively and sensibly, and leave your prejudices where the rest of us don't have to put up with them - waste of space old boy1
    OlderandWiser
    15th Feb 2018
    9:21pm
    Don't jump to nasty conclusions, Raphael. Many areas that flooded were classified by councils as ''flood free'' before the 2011 disaster. I know of many homeowners who didn't take flood cover simply because they were advised their area would not flood, and it had not previously. Others were alarmed that insurers relied unfairly on dubious exclusion clauses to escape liability when they had a moral and ethical obligation to pay.
    Pass the Ductape
    15th Feb 2018
    12:21pm
    I haven't yet been rejected, but I've hardly ever had to make a claim in any case.

    I do believe however, that the clause in most insurance policies which stipulates the first so many hundred dollars of any claim is to be paid for by the insured, coupled with the ubiquitous no-claim bonus, should be scrapped. It is simply an unfair money making ploy for insurers, which allows them to cop out of having to pay out for a great many legitimate, but smaller claims, which might be presented.

    In effect, by not paying out on these smaller claims, this increases the profit margin for insurers by several billion dollars every year.
    Old Man
    15th Feb 2018
    12:26pm
    Every time someone complains about an insurance claim the response is along the lines of; "You should have read the policy." When solicitors trained in the skill of reading legal documents cannot agree on what a policy actually covers, what chance does the average person have. Has the argument been settled yet on what constitutes floodwaters and run-off water?
    Knows-a-lot
    15th Feb 2018
    1:18pm
    Insurance (a form of gambling) is one of the main scams around. There needs to be a Royal Commission into this industry sector: they are a pack of mongrels.
    arbee
    15th Feb 2018
    1:45pm
    Asking an insurance company not to rort their own systems is akin to asking the banks to be charitable to their customers, it aint going to happen in my life time
    Ted Wards
    15th Feb 2018
    1:50pm
    Its not compulsory to have insurances it always a just in case scenario. If you dont like whats being offered or how you are being treated and so on, change companies. The only way they will ever change is in response to mass consumer demand. There are many great posters on this site who could be asked to whip us mass consumer demand so they have no choice but to respond.
    OlderandWiser
    15th Feb 2018
    9:23pm
    If only it were that simple, Ted, but sadly people often don't find out how bad an insurer is until that rare crisis happens - and then it's too late.
    Frustrated
    15th Feb 2018
    3:48pm
    BE AWARE, VERY AWARE.
    Some superannuation policies also offer TPD (Total Permanent Disability) and IP (Income protection) cover, which at first glance seems complimentary BUT it is far from it. With the IP component only contracted hours are covered. An employer may offer a contract of 20hrs/wk where actual worked hrs maybe 40+. The insurer will often only pay the contracted hrs (Check the fine print). As for the TPD, the initial cover is small often around $10-20K and when younger it may seem adequate. Hidden in the fine print is how this cover actually works: The balance of your superannuation fund is deducted from your payout. So let's say you have $20k of cover and you pay the annual premium for that cover, which is deducted from your super account monthly, which is hardly noticed. We all hope that it's never needed to be claimed but on the off chance that it is say in 20 years time you find that your superannuation contributions balance that you and your employer have been making over the years are actually deducted from your insurance payout figure. The result is that if you have $100k in super with $20k of insurance you will only receive $100k and not the $120K.
    Another example is my husband increased his cover to cover our home mortgage "Just in case something happens..." Well, something did happen and he needed to claim and from here the dramas started. With the IP they 'tried' to say 'contracted hrs only' when in fact the policy stated 80% of pre injury income and not contracted hrs. Pre injury income INCLUDED overtime, as overtime was regular and expected by his employer it was part of his regular income. When he queried this with the insurer he was blatantly told "..You are getting what you are getting and that's all you are going to get..." He contacted the super company who sold the policy and eventually the insurer relented and begrudgingly paid the 80%.
    Now my husbands intent was to return to work ASAP, which he did, part time, BUT he returned too soon and his condition worsened. He was then told by the Dr's that he would not be able to return to work, so reluctantly he applied for the TPD component of his policy. The insurer made this whole process so demeaning and convoluted, they wanted each and every piece of paperwork from every dr, every specialist and every hospital my husband had ever visited. Every page had to be signed by the relevant dr and each page needed to be certified by a JP. As if the stress of his condition was not enough, these companies had to add to it. If one page was not signed, it was returned. If a single report was missing the claim was rejected. Every obstacle possible was put in the way so as to not pay the claim. In the end my husband got a lawyer on a 'no win, no fee' basis. This was one of the best things he could have done, they dealt with it ALL. He had to attend medical assessment appointments with the insurers dr's but otherwise the lawyer managed it all. Then after another 12months the lawyer called "WE WON".
    WON? well, we got the insurer to payout then we had the lawyers fees, then the tax AND the payout figure was less the balance of his super account.
    I CANNOT EXPRESS THIS LOUDLY ENOUGH...

    .................DO NOT PURCHASE ANY INSURANCES VIA YOUR SUPERANNUATION...............

    They may offer 'discounted rates', they may offer 'Partnership discounts', even membership assistance programs. DO NOT DO IT. It has cost us thousands in dollars not to mention the stresses, mental anguish and unfathomable frustration in dealing with these mongrels. If you or I ran our business in such a manner we would be charged with a crime.
    Someone else here (Elephants) wants to blame Bill Shorten. But the Liberals are all for big business and you can't get much bigger than the insurers. I wrote to Malcolm Turdball expressing my concern about such business practises. Seems it's all about individual business practises/policies and not government. My argument is that Government allows these practises/policies possible. We need legislation so that these multi nationals practises/policies are NOT possible.

    FRUSTRATED
    toby
    15th Feb 2018
    4:22pm
    I can only comment on how I find Insurance companies. I have had 2 claims over the years and they have been excellent. One car claim with AMMI, when someone backed into me. The car was still derivable. I was going overseas the next day. They took my car, got quotes and had it repaired and waiting for me when I returned from holiday. Taxis were paid to and from the airport. I could not ask for better service than this. The other claim was for contents insurance with APIA. A thunderstorm took out many of my electrical items, including the dishwasher, TV, recorder, and some other things. The claim was accepted (no questions, only receipts required, but items were paid for at current values) and I had a cheque in 48 hours. Again great service. I would strongly suggest using only reputable company s, after all, one does not want to claim but it is good to know when a claim is made it will be accepted. Obviously, if you look for cheap premiums, they have to cut service (and payouts) somewhere.
    KSS
    15th Feb 2018
    4:25pm
    Whilst I do not defend the actions of insurance companies ( for years I have taken the position that their sole reason for existing is to find ways to avoid paying claims) I do think that the insured also needs to take some responsibility. Everyone should read the PDS of every insurance policy BEFORE they accept and pay for the product. It's no good saying later you didn't understand it. Yes some points can be obscure, yes they are not always written in plain English, yes the print is tiny, yes there may be many pages of it, but if you can't, won't or just don't read and understand it, then don't sign it and don't pay the premium.

    However, I think that people who choose to live in obviously high risk areas e.g. on the edge of the bush, in known flood plains, close to the edge of cliff tops or on the beach etc should have to assume that risk.

    And I do agree with Ductape that the 'excess' payment should be scrapped. The premiums paid are high enough and this is just another ploy to 'exclude' benefits from insurance.
    Old Man
    15th Feb 2018
    9:36pm
    The comments made me think about the rorts of home insurance. If your house is insured for, say, $300,000 and it burns down, the insurer can claim that the house was worth $400,000 and as it was under insured by $100,000, that amount is deducted from the amount insured. Interestingly, the amount that an insurance company values the property at includes the land value. If the dwelling burns down, the land remains.

    If a house burned down in 1950's, the owner could ask for a cheque for the amount of the insurance but today, the insurer offers to rebuild the house to the same specifications as what was originally there. As we know, the cost to build a house is far less than the market value so, again, the insurer is able to dud the insured.
    Anonymous
    15th Feb 2018
    10:50pm
    That is total utter rubbish Old Man - who are you insured with - Fly By Night Pty Ltd??
    Jack
    15th Feb 2018
    10:13pm
    I pay an additional premium due to a pre existing illness. To me it is peace mind as I had a brain bleed whilst overseas resulting in 2 weeks in hospital, $15000 retrieval from the mountains by helicopter, accommodation costs for my husband and then medical evacuation back to Australia. Insurance paid everything, even a daily allowance for my husband even though he didn't obtain all receipts. Provide all medical info to the insurer, so they can't say they weren't advised.


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