Cardiology investigations not disclosed
Danny had failed to disclose information to his insurer.
Danny had failed to disclose information to his insurer.
Danny's complaint was not upheld, because he had failed to disclose material information about cardiology investigations when he arranged the policy.
In March 2016, Danny completed an application for life and trauma cover with the insurer. Danny’s adviser wrote on the application that Danny was “concerned he may have forgotten something” and asked the insurer to refer to his doctor.
The insurer told the adviser that it would not request further information from Danny’s doctor, as it was “not warranted” based on the disclosed medical information. The insurer said Danny would need to provide information about any medical information he had not disclosed. The adviser said that Danny could not recall anything else, but wanted to ensure the insurer knew it could ask his doctor. The insurer accepted the application based on the information provided, subject to terms.
In October 2023, Danny made a claim for the trauma benefit, because he had suffered a stroke in August 2023. The insurer requested Danny’s medical information, which showed he had undergone cardiology investigations in October and November 2015 for mixed aortic valve disease with moderate aortic stenosis and moderate aortic regurgitation, with planned follow-up investigations in 2 years. This information had not been disclosed on the application.
The insurer asked its underwriter to provide an opinion about what cover would have been provided if the information had been disclosed and, as a result, cancelled the trauma cover from inception and applied a 75% loading to the life cover. This meant the insurer did not have to consider the claim. The insurer refunded the trauma premiums to Danny, an amount of $15,612.27.
Danny made a complaint, because he did not believe the cardiology investigations were serious or material and he said he had forgotten about them, which was why he had asked the insurer to contact his doctor. Danny believed that the insurer had accepted the risk by failing to contact his doctor.
The case manager’s assessment
The information provided when an insurance application is completed is the basis of the policy, which is a legal contract. Both the insurer and the insured must tell each other about all of the important information relating to the proposed insurance. That means the insured must tell the insurer about material facts such as pre-existing health conditions, medical advice, treatment, medication or symptoms. This is called the duty of disclosure.
The application asked if Danny had ever suffered from, had symptoms of or had treatment for heart disorder, including heart valve disorder; Danny said he had not. However, based on the medical information, Danny’s answer was not correct, meaning he had failed to disclose information to the insurer.
In order to determine whether the information was material, the case manager presented the fact situation (with identifying details omitted) to independent senior underwriters and asked how this would have influenced their decisions to insure Danny. Both of the underwriters indicated that they would have offered cover on different terms and conditions, or deferred offering cover.
Taking this view into consideration and, after reviewing all of the information provided, the case manager came to the conclusion that the information was material.
In addition, the case manager asked the underwriters whether they would have requested further information from Danny’s doctor based on the adviser’s request on the application. The underwriters said they would only request further information, if the disclosures indicated they needed to ask more questions. In this case, the disclosures did not indicate more information was needed. One of the underwriters said that applicants can request their medical information and provide it with the application if they wish.
Because the insurer was not given the information, it was denied the opportunity to properly evaluate the risk. The case manager did not agree with Danny that the insurer had accepted the risk of any non-disclosure, or that he had put the insurer on notice that there was more information to be obtained it needed to ask for, so that it waived disclosure. Rather, the insurer had made it clear that the duty to disclose material information remained with Danny. Unfortunately, it did not appear the adviser had suggested Danny could obtain his own medical information to ensure his disclosures were correct.
Having regard to all the information, the non-disclosure caused the insurer to accept the contract on the terms provided. This meant the insurer could rely on the non-disclosure to avoid the trauma cover and decline to consider the claim.
*Name has been changed