Money For Nothing

To be honest, I’m still in a partial state of disbelief.

In case you didn’t see it, the ABC’s Four Corners program ran an investigation on Monday night called ‘Money for Nothing’. In the space of forty five minutes they shredded the CBA owned insurer, Comminsure, to pieces. And rightly so.

In short, Comminsure was exposed for going to every length to wriggle out of honouring claims. Parts of claim files either went missing or medical staff were asked to change and alter assessments if they didn’t suit the claims manager.

Eventually, the scab was ripped off this filth by Comminsure’s former chief medical officer, Dr Koh. Not wanting to let it fester any longer, Dr.Koh elevated his concerns to the board and was assured they would be investigated. Instead he was dismissed.

Four days later, I still haven’t worked out if these people could be that unscrupulous that they would try this on, or just so dumb that they honestly thought they would get away with it.

Who Can You Trust?
Not surprisingly, I’ve had a few people ring this week about their own Comminsure insurance policies and the chances of being able to make a claim.

First of all, I’ve never recommended Comminsure simply because I don’t like them. Never have.

Secondly, you couldn’t put a big enough gun to my head to recommend any of the big four banks (ANZ, CBA, NAB, WBC) for anything to do with wealth creation. If a client needs to borrow money, I prefer to send them to a mortgage broker instead. It eliminates any bias and a good one will always work harder for the deal.

When the banks first entered financial planning I thought it would be great for our industry because it would help raise awareness. The problem is, they have treated investors and superannuants like depositors and mortgagees…they just shove them into the same box as everyone else in the queue.

It doesn’t work. Everyone has different needs. Even two people in a relationship can have very different goals.

What to do?
As far as taking out life insurance or income protection is concerned, there are a few tips I can suggest:
•    Make sure you go through a thorough underwriting process so that any exclusions are made known up front. The pain upfront is always better than the agony later on of not being able to claim.
•    Double check the definitions inside your policies, especially inside industry superfunds.
•    Find out when you can claim. E.g. a good life insurance policy should enable you to claim at the point of diagnosis for a terminal illness such as cancer. This can make a big difference for prolonged periods of illness.
•    Use a broker or adviser. Not only does it remove any bias, it also gives you access to someone who knows what questions to ask and can contest on your behalf at claim time.

As for Comminsure, they are about to learn a few very hard lessons, most of all about people power. Not only will a lot of their policy holders switch insurers, so too will their sales staff. Imagine working there right now. No thanks.

As for Ian Narev’s performance on Monday night (CBA CEO), what a disgrace. If he had of put the same amount of time into speaking to the claimants and processing their claims, as he did trying to craft and spin his answers on Monday, he wouldn’t be up to his chin in mud right now.

He thought he could save a few million dollars in claims, instead he ended up costing the Comminsure brand, tens, if not hundreds, of millions of dollars in damage. Comminsure ended up paying out most of the claims after the program anyway. Now they’ve lost out both ways.

You reap what you sow.

Have a great week.

Adam

p.s no Moowsletter next week.

Back paddock – Sometimes I sneak into the Balmain library just to mix things up. Anyway, when it was renovated recently, the air-conditioner installers put the sensors on the outside of the building instead of the inside. Consequently, whenever the temperature outside gets above 30 degrees, they start handing out blankets to keep warm. True story.

Can’t wait for winter. I can wear my board shorts and thongs again.