Financial advisers have strongly refuted claims made by law firm Maurice Blackburn that life insurance bought through group super offers greater value for customers than policies that are acquired based on tailored advice.

The Association of Financial Advisers (AFA) says the law firm has “selectively chosen to pick out” portions of the latest statutory industry statistics from the Australian Prudential Regulation Authority (APRA) to make the “untested claims”.

According to Maurice Blackburn, super-linked total and permanent disability (TPD) products deliver stronger consumer outcome because they have a higher claims-paid ratio of 85% compared with 45% for similar policies sold by advisers.

The AFA says the claims-paid ratio is a useful measure, but it does not provide a complete picture as it ignores the complexity of the product and all the costs that a client experiences.

“Both individual advised and group super products have a place in the market,” AFA GM Policy and Professionalism Phil Anderson told insuranceNEWS.com.au. “It is simply wrong to make sweeping statements that one is better than the other.

“This is a complex area and people need assistance to understand what is right for them. Simplistic, generalised statements with no context do not help people to make sensible choices.

“In this market, there are some key drivers of cost, being claims, distribution, underwriting and administration.

“Clients also have choices, principally between getting insurance that is specifically tailored to their needs through a financial adviser, or alternatively getting standardised insurance through an employer superannuation arrangement.”

A spokesman for Maurice Blackburn says the law firm stands by its assessment of the statistics.

“While no one disputes there is a role for individual advised insurance or indeed the benefits paid, the figures make clear that the sector does need to improve if it is to regain public confidence and have that performance reflected in objective statistic,” the spokesman told insuranceNEWS.com.au.

“Group insurance is delivering improved value and strong outcomes for consumers, with acceptances going up and claims times going down.”

The AFA suggests it may be time for regulators to also collect statistics on how much lawyers are charging to help clients pursue a claim benefit. It says such information would provide greater transparency.

“From what we understand, these lawyers often charge at least 30% of the claims benefit,” Mr Anderson said. “There are no statistics on how much of life insurance benefits end up being paid to lawyers.

“The inclusion of this information in the data collected would be very important when measuring value.

“Those who are entirely excluded from the current statistical data need to be much more transparent about their impact on the net benefits received by consumers before making such untested claims.”