Surprises await in application fine print

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Some insurers’ application forms’ fine print is so obscure that even the companies themselves don’t know what it contains.

Wednesday, February 13th 2013, 2:46PM 2 Comments

by Susan Edmunds

That’s according to Bruce Cortesi, who has an advice business, Planwise, and is the Waikato/Bay of Plenty regional chair of the Professional Advisers Association.

He has been examining insurers’ declarations of consent after encountering problems with non-disclosure issues at claim time, and is shocked at what he has discovered.

What customers are signing varies hugely, and sometimes includes things that insurers are not entitled to enforce.

“We noticed over the last few months that with some complex claims we had to go back to the wording of the declarations of consent to understand the intent and meaning behind the wording because some are a little grey.”

Cortesi said Sovereign’s declaration of consent gives them the authority to cancel any existing policies that are going to be replaced. “You’re giving authority for the insurer to cancel a policy your wife might own on you with, say, OnePath. Sovereign can’t go and cancel that policy but it’s what the client is signing.”

AIA reserves the right to recover any medical costs incurred in assessing an application if a client decides to cancel the application. “Someone might decide it’s outside their budget and AIA can cover the costs. AIA have said they’d never do that, but then why have it.”

Another adviser’s declaration allowed it to collect information that wasn’t relevant to the application, as well as data that was, including from employers and Government departments.

Cortesi said it was a lesson for advisers to know what is in the small print. “We need to know what’s in that declaration.”

Most advisers summarised it, telling a client they were confirming they had revealed everything about their health. “But that’s only part of it. There’s all these other clauses. One insurer said ‘it’s only small print, no one reads the small print’. That’s probably a problem.”

He will be presenting his information to local advisers this Friday.

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