What would you do if one of your clients signed up to a Woolworths insurance policy?
Some advisers may have a hernia, others might even stage an intervention, but Chris Guy from Avant-Garde Financial Services thought he would go undercover to see what it was all about.
He registered his interest on the Woolworths Insurance website and says “I kid you not, within two seconds my phone rang”.
Another 32 minutes later and Guy was signed up to a Woolworths policy. But despite how quick it was Guy says it was far more complex than he expected. He says that all the typical questions that insurers usually ask were included in the underwriting process, and they even captured information about the different surgeries that he’s had in the past twelve months.
“I was quite surprised at how in depth the underwriting actually was. I’m not saying it was good but it was a lot more comprehensive than I thought it was,” says Guy. And he says it wasn’t even 50% more expensive, but was reasonably competitive.
“If that’s what advisers have to compete against then it’s pretty scary,” he says.
“When I say scary, I mean I just don’t understand how they get away with it and, if you want to put your risk adviser hat on, why risk advisers are subject to the level of compliance that we are.”
“I guess the concern is probably more around the uneven playing field for how difficult it is for us as advisers to get the clients on the books…We’ve still got to go through the client’s needs analysis, we’ve still got to prepare the statement of advice, we still have to go through everything, we still have to disclose everything in dollars terms and percentage, whereas with this there was none of that.”
Advisers will also cop the blame if something goes wrong because clients know who to target, which would be harder with these groups.
Guy says that it would be difficult for a layperson to judge whether the insurance is adequate or not, and that it is a bit of a catch 22 when it comes to these policies – if it’s inadequate and gives a false sense of security then it’s detrimental, but in the event of a death, anything is better than nothing.
He says he didn’t see anything flawed with the client’s PDS but he also didn’t go into the same level of questioning that he would if it was a retail policy that he was recommending to a client.
Guy’s client cancelled her Woolworths policy and stayed with him on a level premium policy – which he does most of his insurance on and says it makes a big difference.
Wealth Professional tried to contact Woolworths but they were unavailable for comment at the present moment.