A coalition of eleven consumer and older Australian advocates has released a thirteen point strategy to end the funeral insurance rip-off. The strategy was created after the advocates identified a number of concerns with the funeral insurance industry, including misleading advertising, a lack of competition, poor disclosure, and a lack of consumer understanding about funeral insurance products and alternatives.
The strategy comes just months after the Australian Securities and Investment Commission (ASIC) blew the whistle on the funeral insurance industry’s advertising tricks by publicly airing concerns about the advertising of Hollard Financial Services Pty Ltd, which operates under the ‘Real insurance’ brand.
Consumer Action Law Centre CEO Gerard Brody said the advocates wanted to present the industry with a list of practical measures which would have tangible benefits for present and future policy holders. ‘It’s not uncommon for our lawyers to hear from clients who don’t understand the nature of their funeral insurance product. Often they don’t realise the insurance premiums can increase as they get older, meaning the product becomes more and more unaffordable over time.’
‘We only hear from policy holders after the damage is done—after they’ve paid years worth of premiums for a product that simply isn’t right for them. Implementing the thirteen ideas in our strategy would prevent many of the problems we see—and as we all know, prevention is better than a cure,’ said Mr Brody.
Among the thirteen recommendations in the strategy are calls for:
· fixed premiums for the duration of a policy;
· the introduction of capped insurance products;
· improved advertising practices; and
· providing prospective customers with an estimated total cost of the policy.
Mr Brody said the funeral insurance industry is a complicated market. ‘The term “funeral plan” can refer to four different types of products, so it’s no wonder there is wide spread confusion among consumers. ASIC research suggests most consumers buy the first product they come across rather than shopping around. Add some poor advertising practices from the insurers and it’s easy to see why we need change.’
‘Consumer and older Australian advocates have set the challenge and it’s now up to the funeral insurance industry to respond. Insurers need to decide if they want to continue to benefit from a flawed market place, or if they want to let the sun shine in and allow Australians to benefit from greater disclosure, safer products and better consumer protections,’ said Mr Brody.
The eleven signatories to the 13 point strategy are:
· Consumer Action Law Centre
· The Council on the Aging
· Financial Counselling Australia
· Consumer Credit Legal Service (WA)
· Insurance Law Service
· Footscray Community Legal Service
· National Information Centre on Retirement Investments
· National Seniors Australia
· Combined Pensioners & Superannuants of New South Wales
· Financial and Consumer Rights Council