{"id":36516,"date":"2017-03-28T22:25:21","date_gmt":"2017-03-28T11:25:21","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=36516"},"modified":"2025-09-02T11:34:01","modified_gmt":"2025-09-02T01:34:01","slug":"direct-insurance-raises-questions-for-pjc","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2017\/03\/28\/direct-insurance-raises-questions-for-pjc\/","title":{"rendered":"Direct Insurance Raises Questions for PJC"},"content":{"rendered":"

The PJC has questioned the validity of underwriting in direct insurance and asked if direct insurance contracts should be compared with those offered to consumers who purchase life insurance through financial advisers.
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\"Matt<\/a>
Matt Keogh MP, Member for Burt (WA)<\/figcaption><\/figure>\n

An analysis of the PJC hearings by Riskinfo found the Committee raised the matter of direct insurance underwriting at each of three hearings conducted in late February and early March and expressed concerns over the uncertainty created with underwriting at claim time.<\/p>\n

In an exchange with advice representatives from Synchron and Bombora during the Melbourne hearing PJC member Western Australia MP, Matt Keogh<\/strong>, in seeking further information, stated, \u201cThe problem is not that the insurer is waiting to underwrite their insurance\u2014they are on risk for that. The problem is that the insurer is using that as an excuse to not pay when they are legally obliged to pay.\u201d<\/p>\n

This was echoed in the Sydney hearing by PJC Chair and Western Australia MP,\u00a0Steve Irons<\/strong> who questioned whether underwriting was only an assessment of the ability to pay a premium.<\/p>\n

At the same hearing, Keogh asked if consumers were warned about the lack of detailed underwriting at application and whether life insurers should be paying claims but were using underwriting at claim time to avoid doing so.<\/p>\n

He also queried whether the ability of a direct policy to exclude cover without underwriting at application was a problem with the terms of the insurance contracts in use rather than with the process of underwriting.<\/p>\n

Fellow PJC member and NSW MP Jason Falinski<\/strong> raised the issue of disclosure of pre-existing conditions highlighting that this is not always mentioned\u00a0to consumers purchasing insurance.<\/p>\n

\u201cI have serious concerns with direct insurance, because it is not underwritten when you take the policy out\u201d<\/h6>\n

\u201cWhat they say is that the onus is on you to declare any pre-existing conditions, without running you through what those pre-existing conditions may be,\u201d Falinski stated during an exchange with representatives from the AFA, who had\u00a0also raised concerns around direct insurance underwriting<\/a>.<\/p>\n

\u201cThe point is more that you ring up to buy those products, and you think at the end of it, ‘Well, I answered a couple of questions, so now I’m insured.’ No-one says to you in that process, ‘You’re not insured until you’ve declared everything, and you have this duty.’ Is that right?,\u201d Falinski asked AFA President, Marc Bineham and then Chief Executive, Brad Fox.<\/p>\n

\u201cDo you think there is an asymmetric information problem here and the consumer needs to be clearly made aware that they have not actually entered into an insurance contract\u2014or a binding contract, at least\u2014until they have gone through that next step?,\u201d Falinksi added.<\/p>\n

NSW Senator,\u00a0John Williams<\/strong> gave the clearest expression of concern by a Committee member stating during the Canberra hearing: \u201cI have serious concerns with direct insurance, because it is not underwritten when you take the policy out\u201d when questioning a former financial adviser who had appeared as a witness.<\/p>\n

Williams also stated a few moments later: \u201cIs this a really serious problem in the life insurance industry? I say that because people put their head on the pillow at night saying, ‘I’m right. I’m covered. My family is protected,’ and then, of course, the family are left in a terrible state.\u201d<\/p>\n

A full examination of the PJC’s key questions and areas of interest can be found in this story – Inside the Mind of the PJC<\/a> – featured in March edition of the Riskinfo eMagazine<\/a>.\u00a0<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

The PJC has questioned the validity of underwriting in direct insurance and asked if direct insurance contracts should be compared with those offered to consumers who purchase life insurance through financial advisers.<\/p>\n","protected":false},"author":3,"featured_media":36540,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8294,8],"tags":[4247],"class_list":["post-36516","post","type-post","status-publish","format-standard","has-post-thumbnail","category-claims","category-compliance-regulation","tag-feature"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/36516","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=36516"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/36516\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/36540"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=36516"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=36516"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=36516"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}