In our insurance special this week, we ask experts to give their advice on some of the most common queries of policyholders. Here’s a comprehensive guide that covers topics such as factors to consider while comparing and purchasing a policy, understanding the Utmost Good Faith clause, reviewing existing business insurance covers, and how to avoid committing insurance fraud.
Rohit Patel, Managing Director, Eclipse Insurance Brokers
The most important aspect of an insurance contract is utmost good faith. It is a common law principle (sometimes called Uberrimae Fidei). The principle means that every person who enters into a contract of insurance has a legal obligation to act with utmost good faith towards the company offering the insurance. A person must, therefore, always be honest and accurate in the information they give to the insurance company. The insurance company also has a responsibility too as with good faith in all its dealings with the insured. In general terms, this is mentioned in the insurance contract as Duty of Disclosure. Insurance companies rely on the information that the client provides. Therefore policyholders should disclose any information that may be vital to the risk insured. This includes any information that would influence the decision of a prudent insurer to decide whether to accept the insurance and if so, at what terms and level of premium, limitation on the cover, and excess or any other special conditions. The duty of disclosure not only applies when you taking out the policy but also at the time of renewal.
Examples of relevant facts about you, your partner or others insured under your policy, include:
Motor insurances
Home and contents insurances
Insurance companies take this matter seriously and if the policyholder fails to disclose material information or makes a false claim, they not only decline your claims but they can also cancel all your insurances and could also take legal action against the customer. In most cases, the customer will be uninsurable.
We have been approached by customers on many occasion where their claim has been declined and all policies cancelled by their present insurer. We have been able to help some of them, but some cases have been extreme where no insurance companies are willing to insure them. That is why having a specialised experienced broker provides a great value when dealing with insurance companies.
About Eclipse Insurance Brokers
Eclipse Insurance Brokers has in-house claims consultants who guide customers when it comes to making a claim. This free advice adds great value to all our clients. We vet all claims coming in before it is forwarded to the insurer and assist clients until the claims are settled. We constantly follow up on all claims and keep the clients updated. Our aim is to have our clients' claims settled quickly and favourably.
Ram Vaishist, Registered Financial Adviser, Professional Financial Solutions
Insurance fraud is committed when a person falsely tries to claim insurance money when he/she is not entitled to it. It is a crime and can be categorised as either soft fraud (when lying on paper) or hard fraud (staging fake events).
Some of the most common types of insurance fraud in New Zealand are:
Fraud is not only a victimless crime but a social evil. When people cheat insurance companies, honest people pay an increased insurance premium. Insurance companies on an average lose 10–12% of claim amount as fraud claim cost. Insurance fraud can cost up to USD 30 billion. New Zealand is no exception and many societies, group and areas are under the radar of insurance companies and our community is also looked through a magnifying lens.
The first responsibility lies with the society and individual to be honest and transparent while dealing with the matter of insurance. Common Insurance claim, history register and new technology are quite helpful in tracing the fraud. Recently, there was a news report that Insurer IAG’s blackmailer is facing deportation due to his act of non-disclosure. Auckland is holding New Zealand International Fraud Film Festival (NZIFFF) from November 18 to 19 to increase awareness against those who indulge and make money at the cost of others.
Disclaimer: the content of above article is not related to any person or event and it is an attempt to create awareness among the readers.
Kaushal Patel, Registered Financial Adviser, Professional Financial Solutions
Claim is the area where you need a broker most as it has many aspects that only an experienced advisor can help in getting the maximum benefit within the scope of the policy.
Some of the reasons for the life/health insurance claim being declined by the insurance company are:
The responsibility of declining claim lies with the insurance company in view of policy terms and conditions. Hence, the decision is informed to the client in writing with an explanation why the decision has been made. The claimant has the right to:
To avoid all of the above and to have maximum benefit out of your life/ health insurance following few tips are recommended:
In life policies, the ownership of the policy is to be clearly defined:
In brief, a better understanding of the policy through your advisor is the key word, as your experienced and professional advisor is well-versed with all these processes and conditions applicable to your claim. Never hesitate to call your advisor to raise or to get clarification on any issue related to your policy and claim.
About PFSL
Professional Financial Solutions are not just mortgage brokers but financial advisors that will not only work to get you the best deal but also help plan out your financial future and implement those plans too.
We have vast experience in the financial industry working with New Zealanders to ensure they are making smart choices when it comes to their money. We have dealt with thousands of satisfied clients.
Nilanchal Mishra, Chief Operating Officer, The New India Assurance
Admittedly, your business is important to you. But you know that we are operating in a dynamic world where every change that occurs is accompanied by some risks. If your business is showing growth, it means that you are doing well, but it also means that you’ve taken on new and enhanced risks for which you may not have adequate protection. Conversely, if sales are down, you may have reduced your risk exposures. You may be taking in more cover than your business needs (which is unnecessary) and paying more in premiums, thus increasing your operating expenses (which cost you additionally without any attendant benefits).
Your existing business insurance cover needs to cater to the fast changing needs of your business, and so existing policies and exposures need to be reviewed once a year.
New initiatives and business investments such as providing a new product or service and acquiring new contracts create new and/or increased challenges. A business owner needs to ensure that their business insurance is good enough to address these challenges/risks.
Property exposures should be updated frequently. This could factor in:
Most business insurance covers are a combination of Material Damage (MD) and Business Interruption (BI) cover. If your business insurance includes Business Interruption Cover, which most insurance professionals would recommend you to have, it is important to have your policy reflect accurately calculated revenues and risks. Otherwise, you would either be underinsured, in which case your recovery in case of claims would be less than the actual loss sustained, or over-insured, in which case you would be paying more than what you should be paying. If it is possible, you can do a back-of-the-envelope calculation of your current business expenses. If there are natural catastrophes such as earthquake or flood, can you continue to do business? If yes, for how long? It is also possible that you are going through a bad patch and the income is decreasing. This does not mean that your operating expenses are falling. You should bear this in mind before considering reduction of your Business Interruption coverage.
Not all businesses are the same. There are businesses that encounter specific but significant risks that other businesses don’t. Therefore it is important to take a closer look at the entire gamut of risks that your business is exposed to. This can lead you to ask whether your vanilla Business Insurance cover is adequate or you need any or more covers such as Statutory Liability Insurance, General liability insurance, Professional Indemnity insurance, Employers’ Liability Insurance, Transit Insurance, Carriers’ Legal Liability insurance, Machinery Breakdown Insurance, Contract Works Insurance, Fidelity Guarantee insurance and Commercial/Business Vehicle insurance
Remember the efforts that you take along these lines will never go waste. It will protect your business and your profits too.
Remember to ask your adviser if he/she can provide you with a checklist to enable you to comprehensively examine all areas of your risk exposures. Also, an annual review does not mean that you would be avoiding a mid-year or an emergency review as and when necessary. Any major new risk exposure needs to be immediately discussed with your adviser.
About The New India Assurance Co Ltd
The New India Assurance Co Ltd, a government of India-owned multinational general insurance company, started its operations in New Zealand in 2005 and since then been responsive to the dynamics of the market by providing a wide range of innovative products to suit individual customer’s needs and often tailoring them according to customer requirements.
Oliver Pereira, Founder, OPM Insurance Pharmac has recently started funding drugs for the treatment of advanced melanoma, Opdivo from July 1 and Keytruda from September 1. These drugs were previously only available to those with the ability to pay for them out of their own pocket or via a health insurance policy that offers cover for non-Pharmac subsidised chemotherapy drugs.
Because of this, you might assume it would make more sense for people to just go public if the drug they have been recommended is Pharmac subsidised. However, people often prefer to have their treatment performed privately as it gives them more options on where and when they will be treated. Additionally, many Pharmac subsidised drugs are used in conjunction with other drugs that are not subsidised by Pharmac to improve treatment outcomes, for instance, Opdivo is used in conjunction with Yervoy1, a non-Pharmac subsidised immunotherapy drug, for the treatment of advanced melanoma.
While Opdivo is Pharmac subsidised for advanced melanoma, it is not currently funded for treating lung cancer despite being MedSafe indicated for this condition. This means lung cancer patients who are prescribed this drug will still need to pay for it themselves or by using their health insurance.
Insurance Companies are also seeing claims for new non-Pharmac subsidised drugs that are MedSafe indicated. In the case of breast cancer Insurance companies have received claims for a number of non-Pharmac subsidised drugs such as Kadcyla (Trastuzumab emtansine)2 and Perjeta (Pertuzumab)3 that are being used to treat HER2 positive breast cancers4.
While Pharmac’s funding decision is fantastic news for New Zealanders facing a diagnosis of advanced melanoma, it in no way negates the value customers get from the Cancer benefit available through some providers of Private Medical Insurance. We know there are a number of new drugs under development5 and that they aren’t always funded for every cancer type they are used to treat. For instance, there are over 700 new cancer drugs and vaccines in active clinical trials or with the Food and Drug Administration (FDA) for approval6. The reality is Pharmac will not be able to fund all of these drugs, so the value of non-Pharmac chemotherapy cover is likely to only increase over time as more advancements are made.
References
[1] Larkin, J. et. al. (2015) Combined Nivolumab and Ipilimumab or Monotherapy in Untreated Melanoma.
[2]Peddi, P. F., and Hurvitz, S. A. (2013). Trastuzumab emtansine: the first targeted chemotherapy for treatment of breast cancer
[3]Fabi,A., Malaguti, P., Vari, S. and Cognetti, F. (2016). First-line therapy in HER2 positive metastatic breast cancer: is the mosaic fully completed or are we missing additional pieces?
[4]Breast Cancer Aotearoa Coalition. (2016) Exciting new breast cancer medicines now available to be used in NZ.
[5]Farkona, S., Diamandis, E. P. and Blasutig, I. M. (2016). Cancer immunotherapy: the beginning of the end of cancer?
[6]Buffery, D. (2015). The 2015 Oncology Drug Pipeline: Innovation Drives the Race to Cure Cancer.
Disclaimer: The above article should not be taken as advice and is for information only. If you want to know more about Private Medical Insurance Options call us. We can also look at your personal life insurance needs, and recommend a plan tailored for you that will ensure you and your family can get through whatever life throws at you. A disclosure statement as required under Financial Advisers (Disclosure) Regulations 2010 is freely available on request.
About OPM
More than 10 years ago, OPM Insurance was founded by Oliver Pereira. Today, having built many strong working relationships with major New Zealand insurance companies, OPM is given a premium level of service from these organisations. In turn, our clients enjoy an unparalleled level of service due to Oliver’s long-serving dedication to the insurance industry. At OPM, we are here to help you make sense of your insurance policy. As specialist insurance advisers, we work together with you to customise insurance policies and ensure that it protects what’s important to you. We specialise in Life, Health, Trauma, Mortgage and Income Protection insurance for our personal customers. We are also experts in Shareholder, Key Person and Debt Protection for our business clientele.
Rachana Dave, Mortage and Insurance Adviser, Loan Market
When one needs a home loan or personal risk insurance, they need a trusted advice from their adviser. The expectation from the adviser is to have an up-to-date market and product knowledge to give correct advice to the potential customer.
In the past 10 years of my professional experience, I've noticed that most of the time, people are not comfortable discussing their personal and financial issues or concerns. Therefore they end up either not taking any insurance cover or under cover. I strongly advise all customers to share their correct financial situation in order to ensure that they have got an adequate cover to protect them in their situation.
In simple terms, pay an insurance premium to cover you and your loved ones from any unforeseen events.
There is no specific age to start the insurance cover, as there are many types of insurance covers. Ideally, people consider taking a cover when they are buying their home.
There are mainly two categories of insurances:
1. General insurances that includes
2. Personal risk insurance
My advice is not to take any insurance policy without understanding what it covers and simply for the fact that it is cheap. All policies are different from each other and need to be reviewed on a case by case basis.
The key things to keep in mind when thinking of committing to an insurance policy: