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  • Scenario: Buying insurance

    The following scenario relates to an initial enquiry about insurance and a subsequent purchase.

    Engage in the sales process with the client in an honest, fair and transparent manner.

    Refer to Section 4 of the Code for additional guidance.

    Select Start to begin.


    "Good morning and welcome to Phoenix Insurance. How may I help?"

    "Hi there. Look I've never had to buy insurance before so I'm feeling a little daunted and confused.

    I'm really struggling to understand and I'm so confused.

    The issue I'm having is that there's a huge range of insurance products and policies online…"

    Refer to your obligations under Section 4: Buying Insurance before responding to the customer.

    How do you respond?

    “What in the world are you talking about?"

    Your response has clearly confused the customer and is a breach of section 4.5 of the Code:

    We will take reasonable steps to ensure that our communications with you are in plain language.

    Perhaps you should keep in mind the customer’s basic understanding of insurance terminology and offer a different response?

    “Really? And how did you determine that?”

    The customer is wise enough to detect the possible falsity underlying your sweeping generalisations. You have also managed to commit a breach of section 4.4 of the Act:

    Our sales process and the services of our Employees and our Authorised Representatives will be conducted in an efficient, honest, fair and transparent manner, in accordance with this section.

    Why not agree that you’ve made a slightly exaggerated statement and wish to try again?

    “I don’t see how my blood type has anything to do with it...”

    Your response has clearly frustrated the customer and is a breach of section 4.6 of the Code:

    We will only ask for and rely on information and documents relevant to our decision in assessing an application for insurance.

    You probably should apologise and respond in another way.

    “Sure thing and thanks!”

    That’s a great response that shows you are committed to providing a high level of customer service.

    You continue to assist the customer with their insurance needs and find that based on their situation, you are unable to provide the insurance product.

    Refer to your obligations under Section 4: Buying Insurance.

    What do you say next?

    “Oh, that's too bad… but yeah, go ahead...”

    Although, the customer is upset about your decision to reject their business, you’ve ensured you maintained a high level of customer service by providing them with reasons for your decision as per section 4.8 (a):

    If we cannot provide you with insurance, we will:

    (a) give you our reasons;

    Are there any other responses you could provide at the same high level of customer service?

    “You win some, you lose some, I guess… If you could, that would be great.”

    Sure, the customer is still upset about your decision, but you’ve exceeded their customer service expectations by providing them with alternatives as per section 4.8 (c):

    If we cannot provide you with insurance, we will:

    (c) refer you to the ICA or the National Insurance Brokers Association of Australia (NIBA) for information about alternative insurance options, or another insurer;

    Are there any other responses you could provide at the same high level of customer service?

    “The privacy principles? Are you serious?!!! Get me your manager, please. I’ve had enough of this nonsense”.

    Take a moment to regroup and offer another alternative to calm them down.

    “I thought I was speaking with a real human being here. What is this?”

    Your lack of empathy in response has led to the customer feeling overwhelmingly disappointed. They expected a little more sincerity and other possible options.

    Take a breath and then take another shot.

    The customer is curious about your decision to decline their request for insurance. They ask to view the information you relied upon in making this decision.

    Referring to section 4.8 of the Code, what should you do in this situation?

    See also Section 14 of the Code, and visit the FOS website.

    2 days later…

    “Thanks for this. Could we talk about what I can do to be able to lower my risk profile?”

    You’ve done a great job by supplying the required information while keeping in mind Section 14 of the Code (especially the Australian Privacy Principles).

    The customer contacts the FOS to find that you have led them down the wrong track. The FOS gets involved once the customer goes through your organisation’s internal complaints process. It is way too early for them to get involved and the customer demands to speak with your manager.

    “Oh, I’m calm. Why don’t you get your manager on the line so we can chat calmly about the issue. These calls are recorded right?”

    You nervously approach your manager, wondering if you've handled the call in the best way…

    Hold up!

    There might be information you may need to consider in line with the Australian Privacy Principles.

    To avoid a breach of the Privacy Act, what might be another, less risky option?

    About one week later, your team leader receives an email from the same customer stating they feel the decision to reject their business is unjustified.

    Send the most appropriate email response.

    Email inbox:

    Months later, you are facing the Internal Dispute Resolution (IDR) committee explaining your abrupt email.

    The case officer asks you to refer to section 4.8 of the Code.

    What would you do differently if you could go back?

  • Case study

    Select Start to begin.


    “Hi there, I’m calling to cancel my policy because I’m going to be moving overseas in a couple of weeks. Do you know when I’ll be able to get any remaining premium paid out? It’s just that I need to close banks accounts….”

    Refer to section 4.9 before responding to the customer.

    What do you say next?

    15 days later…

    “Yeah, listen here. There’s no money in my account and I’ve scheduled my flight for tomorrow. What’s going on?”

    Have you over-promised?

    Let’s turn back time and give you another shot…

    Your supervisor comes over to congratulate you on some recent positive feedback from this customer. They’ve said you made the move overseas a little less stressful by delivering on your promises.

    According to the General Insurance Code of Practice, section 4.9, if an insured cancels a policy, you need to send any owed monies within 15 business days. You have supplied the correct information to the customer.

    Well done!

    10 days later, the customer calls back in a panic that they have not yet received their money.

    “Hi there. Look, my flight is scheduled for six days from now and I was told there’d be money in my account. Could you please check your end to make sure everything’s gone through?”

    Perhaps you should refer to the Code of Practice for information on minimum time limits for refunding any monies owed for a cancelled policy?

    “What does that have to do with anything? Could you just give me a figure? This is ridiculous…”

    Take a moment to take a deep breath and regroup. What might be a better response?

    You end the call with another satisfied customer and head off for a quick coffee.

    Upon your return, you notice an email notification. Ash, a new claims service provider, has a quick question regarding instalment policies.

    Referring to Section 4.10

    Send the most appropriate response to Ash’s question.

    Think carefully about Ash’s question and revise your response.

    Refer back to Section 4.10 before replying to Ash.

    Keep in mind that according to Section 4.10 of the Code:

    …if the customer does not respond to the notice you send out 14 calendar days before the cancellation, your organisation would need to send a second notice in writing, either:

    • prior to cancelling the policy to informing the insured that you are effectively cancelling their instalment policy for non-payment; or
    • within 14 days after cancellation, confirming the cancellation of the instalment policy.
  • Cancellation rights

    Refer to sections 4.9 and 4.10 of the Code before answering the following questions.

    Why do you think the Code requires insurers to commit to this timeframe?

    What would you do if you didn’t receive the instalment payment after sending the notice in writing regarding non-payment?

    Why do you think there is a difference in the timeframe when customer has a broker acting for the insured?

  • Case study: the difficult customer

    Read the following case study before responding to the closing question.


    Vince submits an application to World's Best Insurance Brokers to arrange insurance for his Mazda sedan, which he uses solely for private purposes.

    Rosa, the insurance broker considering his application, telephones Vince's previous insurer – Mega Insurance – to check some information about a previous claim Vince has mentioned on the application form.

    The Mega Insurance employee tells Rosa that Vince was a very difficult customer. Although Mega Insurance paid his claim, they did so begrudgingly because they thought Vince had been fraudulent about some of the items claimed. Nonetheless, they had no evidence to support this accusation.

    Rosa decides she does not want to accept an application from a potentially difficult, not to mention, fraudulent customer. She is concerned about Vince's honesty, given the Mega Insurance employee's testimony. Rosa writes to Vince informing him that World's Best Insurance Brokers is unable to accept his application because the risk falls outside the "insurer's underwriting guidelines".

    After receiving the letter from World's Best Insurance Brokers, Vince telephones Rosa to ask why his application did not meet the insurer's underwriting acceptance criteria. Rosa tells him that she is unable to elaborate on why the insurer has rejected his application. Vince asks Rosa how he is supposed to drive around in an uninsured car.

    Rosa suggests that he looks in the telephone directory for another insurer. Vince tells Rosa he is most unhappy about the decision and is not satisfied with the reasons for the rejection.

    What has Rosa failed to do in her dealings with Vince?