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Insurance law advice service faces closure

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The Financial Rights Legal Centre says its Insurance Law Service will have to close in July next year due to a lack of government funding.

The warning follows a 16% increase in demand for the free consumer advice service since March.

Centre Co-ordinator Karen Cox told the service receives 70-100 calls a day. It is so stretched it can take only about 45% of incoming calls.

“We deal with everyone from the well-off right through to people in dire circumstances,” Ms Cox said.

“However, the ones we usually take on or assist further are mostly low-income. A lot of our clients are on pensions or benefits.”

The service was established in 2007 with one solicitor, and now has five staff. It will not be able to fund these staff after July next year.

Ms Cox says closing the service would result in consumers losing access to a decade of expertise.

“No other free service specialises in insurance,” she said.

While consumers have access to the Financial Ombudsman Service (FOS), many people lack the skills to argue a complicated insurance claim with the ombudsman, Ms Cox says.

“We get a lot of referrals from FOS because it recognises we can do what it can’t, which is give people independent advice.

“Some people do not realise which part of their case is relevant. We can tell people when they are barking up the wrong tree.”

Lead Ombudsman for General Insurance John Price told the centre provides an “invaluable service” to consumers and FOS has an “excellent working relationship” with them.

“To see them go would increase the burden on other consumer services, including FOS,” he said.

Mr Price says the centre is the only major advocacy group specialising in insurance, and liaises directly with consumers to help resolve insurance disputes.

Ms Cox says insurance has been a no-go zone in terms of regulation, and that needs to change.

“There is plenty of room to improve consumer rights without threatening the viability of insurers.”

The service wants unfair contract terms applied to insurance, and says the onus should not be solely on the customer to understand the product.