SERVICE: Income Protection
OUTCOME: Not upheld
Issues: Non-disclosure
Summary: Ms C’s* complaint was not upheld, because Ms C did not disclose her cannabinoid use when she arranged the policy.
In November 2014, Ms C applied for life, trauma, disability, household expenses and premium cover with an insurer. Cover started in February 2015.
In November 2015, Ms C suffered a head injury, and had difficulty working as a result. Ms C made a claim to the insurer for household expenses and premium cover under the policy.
The insurer obtained Ms C’s medical file, which noted her occasional cannabis use to help with insomnia and anxiety. As a result, the insurer asked Ms C to complete a questionnaire about her drug use.
In the questionnaire, Ms C confirmed that she had used cannabinoid since 1993, smoking occasionally until January 2012. From 2012, she intermittently ingested the cannabinoid as a tea or in baked goods approximately every 1-3 months. Later, Ms C said that this was not accurate, and she had only used the cannabinoid as a tea on a few occasions with a friend.
The insurer believed that Ms C had failed to disclose the additional information when she applied for the policy. Therefore, it told Ms C that it was avoiding the policy and declining to consider the claim.
Ms C advised that the insurer had full access to her medical records and her full history was disclosed to her broker. Ms C said her medical history was disclosed but then used as a reason why the insurer was not going to cover her injury.
The case manager’s assessment
The law says that there was an obligation on Ms C to disclose all material information when she arranged the insurance policy. This meant that the insurer was not required to obtain Ms C’s medical notes before the start of the policy. It was Ms C who needed to give the insurer her medical information.
Ms C confirmed that she ceased smoking cannabinoid in 2012, which was more than 12 months prior to the application on 19 November 2014. Therefore, she did not need to tick the box for marijuana under a smoking question.
However, a restricted drug question asked if Ms C had ever used any restricted drug which was not prescribed to her by a doctor. Ms C ticked the “No” box, confirming that she had not ever used any restricted drug which was not prescribed to her by a doctor.
The additional information indicated that Ms C should have ticked “yes”, to the restricted drug question, as she had intermittently ingested cannabinoid as a tea or in baked goods approximately every 1-3 months.
Ms C also said that she told her financial adviser about her cannabinoid use, when she arranged the policy with her financial adviser’s assistance. The adviser said Ms C did not because, if Ms C had, the financial adviser would have added it to Ms C’s application, and Ms C would have been asked to complete the questionnaire at the time Ms C arranged the policy.
When assessing complaints, the IFSO Scheme takes the available evidence into account. Unlike a court of law, however, the IFSO Scheme does not hear oral evidence on oath. For this reason, documentary evidence is usually more persuasive. Where the parties present conflicting oral evidence, the IFSO Scheme may not be able to establish what happened if there is no documentary evidence to assist.
There was no documentary evidence which confirmed Ms C told the adviser about the additional information. In addition, when Ms C signed the application form, she had checked the information and it was complete.
In order to determine whether this additional medical 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 Ms C. Both of the underwriters indicated that the additional information was material information, because they would not have offered Ms C cover at the time. This meant that the insurer could avoid the policy and decline to consider the claim.
On the basis that the insurer was not given this information, it was denied the opportunity to properly evaluate the risk. If the insurer had been aware of the information when the policy was being arranged, it indicated that it would have avoided the policy.
*Name has been changed
Complaint No: 00230822