Do you ever change information on clients insurance proposals?

Strategi LimitedAdviser Groups Do you ever change information on clients insurance proposals?

Do you ever change information on clients insurance proposals?


Here is a good reason not to.

Former financial adviser pleads guilty to forging clients’ initials

Now in this case the adviser committed fraud (And I am glad the FMA took action), but what if he had a phone call with the client and the client told him to make the changes to the application, but then the client lied about it at claim time? Could he prove the client was lying?

We deal with half a dozen non-disclosure disputes a year involving Insurance Advisers who have clients who have a claim declined due to non-disclosure.  The clients first defense to the insurance company is “I told the adviser but he; (a) told me not to write it down, (b) didn’t write it down, or (c) asked if it was in my doctors/medical records and if it is not don’t write it down”.

Then the burden of proof falls on the adviser to show he didn’t do (a), (b) or (c).

So how do you do that?

First off you can get client to complete the application in their own hand writing.  Though I think handing them the form and asking them to complete it without explanation is not the way to go.  The way the questions are worded needs explanation.  We have some clients who ask medical questions at the start of the fact find process before they even get near an application, so the client can go and check records before they get to the actual insurance proposal, and the adviser can chat to underwriters about pre-existing conditions.

Secondly, make sure in your written advice you state the duty of disclosure during the advice and insurance application processes.  This could be part of your sign off process on the statement of advice.

Thirdly, send them a copy of the application and ask them to read it fully to ensure it is full and complete disclosure and also remind them that the duty continues until the underwriting decision has been made.

These days there are other options such as telephone underwriting etc, but the advice around disclosure is still relevant.

And remember your records of the process will be what saves you.

Stay safe out there.