Kyith: Hey, today, I will be bringing to you guys and gals something that is not often discussed on Investment Moats. We talked a lot about insurance but there are some aspects of insurance that I am not in a good position to look into. One area is, what happens when you get tangled in some form of mis-selling by an insurance adviser and you would like to seek recourse?
The folks at Clearly Surely approached me for a guest post and I thought of using this opportunity to get some value for you guys in something that may be of value. This is a real life case study of a policy dispute. While the outcome may not be what we, as consumers desire, I like that this case study shows us the problem, the process and the reality of how easy or difficult we can achieve the outcome we want.
I came away reading this case study feeling rather demoralized. Its not easy to read fine print. There are those that are diligent enough to do it, yet majority trusts their adviser more. Whether you read or do not read, the odds are very much stacked against you as the consumer. The rule of thumb in this instance is, declare and be transparent, rather than deliberate whether this will increase your premium or does this fall into the area that is inconsequential.
When it comes to important documents, we are often told to read, re-read and when in doubt, clarify. Know what you are signing off on, never sign off blindly, our folks tell us. An insurance policy is one such document to comb through with a fine-tooth comb.
What if you did clarify with the insurance agent but still ended up in a tangled mess?
Is there any recourse?
Where and who should you turn to?
Fortunately in Singapore, you can bring your case up to the Financial Disputes Resolution Centre (FIDReC) to resolve your dispute with financial institutions. When a consumer runs into problems with general services and merchandise, he or she typically approaches Consumers Association of Singapore (CASE). FIDReC would probably be the financial industry’s equivalent of CASE. It specializes in the handling of financial contract disputes and is an independent (quasi-legal) body.
Below is a story of Daryl* who approached us about his long-running journey that spanned years, to seek redress for an insurance policy he bought. Get ready for a tale of the emotional roller-coaster ride he went through.
Here is his story.
Several years ago, I purchased an insurance policy at a roadshow. The deal seemed great at that time and I decided to buy it right there and then.
As with most sales, the insurance agent hurriedly carried it out to close the sale. Of course I wasn’t silly enough to sign on the dotted line without first looking through the documents. I caught a particular declaration in the proposal form that I had some doubts on. I thought it was probably inconsequential but decided to check with the agent anyway. She too agreed there was no need for the declaration to be made. Really, what did I expect from her? Of course she said there was no issue.
I’ve been told that insurance provides peace of mind to cover small probability events with huge consequences. For me, it turned out otherwise.
In late 2013, I was involved in a minor bike accident and as a precaution, I was sent to the hospital for a CAT scan. That was when they discovered a tumour growing in my head.
Huge consequences for me? You bet.
A small probability event? When something like this happens to you, small probabilities are never small enough.
Fortunately, the surgery to remove the tumour was a success. I was overjoyed! Then I recalled I could make the claims from my insurance policy. Or so I thought.
This was the point it all went downhill.
When an Inconsequential declaration became not so inconsequential
No prizes for guessing what happened. My claims for the surgery were rejected. The rejection stemmed from the ‘inconsequential’ declaration when I first purchased the policy.
I was seething with anger. I was induced into buying this policy, I paid my premiums diligently all these years and now, the rug was pulled from under my feet?!
The implications of not having a complete understanding of my non-disclosure came back to bite me. Specifically, it had to do with a long past medical condition which was undeclared. Although the past condition was of no medical relevance to the tumour, the claim was still rejected. The key reason for was that they felt I was not truthful at the point when I purchased the policy.
Taking the fight to FIDReC
The insurance company made me the offer of rescinding the contract and returning my premiums. I refused it. I felt strongly that I was entitled to my claims as I held up my end of the deal.
Following a period of back-and-forth unsatisfactory replies with the company, I was offered the opportunity to take my case to the FIDReC. A chance to air my grievances to a third-party and get the justice I deserve? Of course I took the fight on it in a heartbeat!
While mediation attempts were made so that both parties may reach a mutual agreement through negotiation, it went nowhere as both the company and I stood our grounds, without ceding space.
The Adjudication Process
I was told of the process: The adjudicator, composing a panel of people, will go through the details of my case and provide a ruling.
Technically, even if the adjudication does not work out in my favor, there were still legal options I could pursue. However, the time, effort and legal fees involved would make it highly prohibitive if I went down that route.
A time and date was set for me to turn up and argue my case. I had one shot and I had to make it count.
The day of reckoning finally came. Over the weeks, I thoroughly went through the paperwork and have lost count on the number of times I paced up and down while rehearsing in my head the story I will be delivering. I imagined it to be a solemn session, just like in the courtroom movies with the judge, jury and legal experts presiding over the case.
The room I was ushered into was about the size of a class room with a seating capacity of around six people. I half-anticipated a wig-donning adjudicator carrying a grim look waiting for me. After all, it was my first brush with this situation and I did not quite know what to expect.
The adjudicator was not there yet but when he strolled into the room, it took me by surprise. It was not quite what I expected.
A good start
The adjudicator was an elderly gentleman. He had an air of respectability but he spoke in a casual and relatable manner. I was immediately put at ease by his presence.
We bantered so casually and naturally that I lost track when our conversation started delving deeper into the case.
As I stated my claims and argued the validity of it, the adjudicator was nodding in agreement with me. The insurance company’s representative who was also in the room did not have much to remark on the things I said. These signs were surely in my favour, I thought!
The adjudicator proceeded to call in a witness for the case. It took me a few seconds to realize who the person was but I recognized her as the insurance agent who had sold me the policy years earlier.
The Great Pretender
The agent appeared to have forgotten who I was. After selling hundreds if not, thousands of policies to clients, can I really expect her to remember me? I was just another face in the crowd and a statistic that added to her sales target.
When asked by the adjudicator if she could remember the details of the policy sale to me, she shook her head.
When asked about the typical ways that she closes a policy sale, the agent proceeded to run through a long list of procedures that she adheres to – basically all the right things to say. It was at this juncture that I realised it was not just me who came prepared.
I definitely did not see this one coming but I was given the opportunity to cross-examine the witness! I could only think of one question and blurted out: “Do you truly care about all your customers’ welfare? Or are policies sales what you are really concerned with?”
Her reply? “I care for all my customers.”
I felt a surge of blood to my head. I was totally appalled by her unflinching expression.
I retorted, “Since you care so much about your customers, why was there not even one follow-up call from you after the sale?”
An uncomfortable silence followed. That was just the answer I needed.
Victory in the vicinity
The adjudicator’s next question provided the final nail to the coffin of her integrity.
“Do you fill in forms for your clients? Who fills in the forms?”
To which she replied that clients fill in all forms themselves and she does not ever complete them on clients’ behalf. That is an outright lie and I was determined to expose her.
I suggested engaging an expert to compare handwritings on my forms to determine if it matches hers or mine. My natural handwriting is too much of a scribble to match that of the neat handwriting on my forms. And she knows it.
There it was again, the deafening silence. Perhaps silence to everyone else but to me, it was sweet music to my ears.
Her game was up and I was winning this fight! I could almost smell victory.
The end of an Emotional Rollercoaster
The witness withdrew from the room and there I was, feeling triumphant.
That was until the adjudicator pointed out a crucial fact: My signatures were on all the documents.
No matter whether I was misled or induced to buy the policy, the bottomline was that I signed on the dotted line. My signature essentially meant the decision was made by me and the responsibility was mine to bear.
The adjudication ended with him saying that the outcome would be out in about a month.
If I could turn back the clock
Contrary to what you might think about my loss in faith of insurance, it isn’t the case. Insurance is essential for everyone. It alleviates a great amount of pain monetary-wise when the unexpected occurs.
I can only blame myself for not fully comprehending the implications behind the paperwork I was signing.
My tale is a cautionary one – details matter ALOT. Plenty of money is at stake when it comes to insurance. Through this experience, I learnt to read fine prints in detail and am more careful about committing to a contract.
If I could turn back the clock, even if going through the documents thoroughly leads to delays of days or weeks to incept a policy, I would have done so instead of hastily jumping in. That would have been nothing compared to the long and painful ordeal I went through as a consequence of my oversight and naivety.
Bottomline from Clearly Surely
Through Daryl’s experience, we hope to caution readers on consequences that may be faced purchasing financial products, such as insurance, without properly understanding the implications when signing on the dotted line.
It also serves to inform readers of the work that FIDReC does and the adjudication process. The existence of FIDReC is not known by most. Depending on the facts of each individual case, the FIDReC has ruled favourably in some cases.
Unfortunately, it cannot be certain that the adjudication will always be in the consumer’s favour.
For many of us, resolving financial disputes through the FIDReC platform is the most cost-effective and a relatively quick route. The alternative may be a long-drawn process through civil suits in the courts and may likely result in the same outcome should it have gone through FIDReC. In Daryl’s case, the total costs amounted to less than $150, including the nominal administrative fee of $50 and other miscellaneous administrative fees.
We thought it would be useful to list some key points to note about FIDReC:
- The limit of FIDReC’s adjudication for disputes between consumers and financial institutions is up to S$100,000 per claim for all claims
- The Adjudicator’s decision is final and binding on the financial institution, but not on the complainant. The complainant is free to reject the decision and pursue the complaint through other avenues if he or she is not satisfied
- Each claim costs $50.00 (subjected to GST), which is far more economical than engaging a lawyer to pursue your case in court
- FIDReC‘s website lets you find out more about them.
ClearlySurely is an independent Singapore-based insurance information and comparison platform. By providing unbiased information, it aims to eradicate consumers’ gap in knowledge of life insurance. ClearlySurely’s Discover tool provides consumers with a unique and personalised report of their insurance requirements based on their inputs about themselves, their priorities and needs. The Compare tool makes it a breeze for consumers to compare different term, whole life, mortgage insurance and endowment plans across different insurers based on some basic information about themselves.
The details of the case, as well as the parties involved, are all required to be kept in strictest confidence. This is to preserve the judicial integrity of the work that FIDReC provides. As such, all names, companies, and other information directly linked to the case will not be divulged.
*Names and timelines have been changed for confidentiality reasons.