Client Disclosure Warnings in the Spotlight

Do you intend to review the disclosure warnings you give your clients at policy application time?

  • Yes (75%)
  • No (15%)
  • Not sure (10%)

Our latest poll is asking whether you will be reviewing your client advice processes, given the outcome of a recent court case.

Last week, we reported on a court ruling that held an adviser jointly responsible for the denial of a life insurance claim due to non-disclosure.  The adviser was found not to have adequately followed up on his client’s medical condition prior to cancelling a life insurance policy in favour of a new contract (see: Court Verdict Sends Warning to Advisers on Disclosure).

There are multiple issues that stem from this case and the decision made by the judge – a decision that may re-shape the processes and procedures of advice practices across the country, particularly with regard to when and how an adviser counsels his/her client about disclosure and non-disclosure.

Many advisers and other industry contributors will determine their own view of the merits of the judges’ ruling in this important case, one that all advisers should read, and we will report these conversations with you in the coming months.

In the meantime, we are keen to know whether the outcome of this case will give you pause to review your own practices, processes and procedures when it comes to warning your clients about their duty to disclose all relevant medical details at policy application.  What are your own views?  And if you don’t hold your own AFSL, what is your licensee’s position following this court decision?  Do you agree?  Tell us what you think…

(Click here to read the full judgement in the case of Swansson v Harrison & Ors.)

  • BM

    I just purchased an animated video from Doodler that explains the duty of disclosure in an entertaining/engaging way and am send this to clients prior to the application and requesting an email back that confirms they’ve viewed and understood it.

    For recent clients I’m also using the judgement to drill down a bit and specifically ask whether they’ve had any ailments where they’ve seen a Dr or thinking about it. Perhaps the insurers could get involved for those applications that don’t go straight through by sending out something that only needs to be returned if a condition has arisen since the application has been accepted.

  • JM

    Hi BM,
    I think the key message arising from the recent court cases (CFP v Couper, Swannson v Harrison & Ors) is that advisers CANNOT leave these things up to the Insurer. That is, it is the adviser’s responsibility – as the expert providing the advice and the implementation service – to look out for the client and for potential gaps that may occur in the implementation of the advice.

    Further, in this particular case, the judge more or less acknowledged that the adviser had made sure the client was aware of their duty of disclosure. What was missing was the 1 phone call BEFORE cancelling the existing policy to make sure there were no changes to their health condition since time of application.

    The bar has been raised to a new level by these recent court judgements.