AON accused of churning insurance customers
The letter from AON sent in May, says it will be contacting all of those clients who are not insured with one of its preferred insurers and reviewing their covers.
"We're writing to advise you that an agreement has already been reached between AON and Sovereign Assurance, which gives you the opportunity to transfer your insurance cover to Sovereign.
"As one of our new panel of providers, Sovereign is offering to transfer your cover on a like for like basis, without the need for any medical questions or examinations."
Newpark Financial Services managing director Darren Gannon says he finds this disappointing.
"To hear of two big corporates engage in churning is shocking, we've had two and a half years of hearing about advisers churning business and the situation has slowly been improving and there has been a lot of talk from the ISI about it.
"With Sovereign as a member of the ISI it will be interesting to see what the Association does about this."
GoodReturns could not reach the ISI for comment and AON was also unavailable.
Scott Wilson from Asset Wise is also "disgusted at this blatant attempt at churn".
"It may not be best for the client and you can bet your bottom dollar a lot of clients get caught out," says Wilson.
However he believes AONs agency wording is such that it can do what it likes with the clients of brokers and technically nothing is illegal.
Sovereign general manager product and marketing David Drillien says he thinks the ISI Business Replacement Rules and Reinstatement guidelines are about good disclosure, not about suppressing competition between insurance companies.
"We believe our involvement is entirely appropriate, above board and consistent with ISI policy."
He believes there are always situations where better offers and policies are around and that it is perfectly reasonable for clients to shift insurance and to have advisers recommend that switch.
"I don't accept that the ISI policy is about discouraging good advice to change policies, it's about good disclosure to clients."
The ISI has always said it is working on the business replacement policy because there have been a number of unfortunate cases where benefits under a replaced policy would have triggered a successful claim, but the new one did not.
The AON letter looks at whether policy benefits are the same and says the new Sovereign policy should at least offer the same level of cover as a clients existing policy and the adviser will take the client through a comparison to ensure they are aware of any differences.
"However, because of Sovereign's size and reputation for product excellence and innovation, your new policy is likely to have enhanced benefits over what you currently enjoy, this may also be an opportune time to review your insurance coverage," says the letter.
"We encourage you to take advantage of this opportunity to enhance your protection plan."