"Never make assumptions about insurance policies"

"Never make assumptions about insurance policies" | Insurance Business New Zealand

"Never make assumptions about insurance policies"

In the same way that there are no eggs in eggplants and that hamburgers aren’t made of ham, Asia isn’t part of Australasia – the latter point being an important piece of information that a certain policyholder in New Zealand would have known had he fully understood his insurance coverage.

The Insurance & Financial Services Ombudsman (IFSO) scheme exclusively shared with Insurance Business a complaint involving a man who argued that the hospital bills he incurred, as a result of contracting COVID-19 while travelling in India, should have been covered under his health insurance that included Australasian coverage.

The insured, whose medical bills amounted to $28,000, put forward the case to IFSO after his claim was denied. His insurer clarified that Asia (while the continent’s name literally can be found in the term “Australasia”) wasn’t within the policy’s span.

Equally worthy of note is the fact that the policy, according to the insurance company, excluded emergency treatment. Moreover, the policyholder was cited as not having met the overseas treatment provision requirements.

“[The man] made a complaint about the insurer, saying he changed from his previous insurer because his financial adviser told him that the new policy had worldwide cover,” said the IFSO scheme. “In addition, [the man] believed that the wording was misleading as it said ‘Australasia’, which he believed meant Asia, including India.”

The complainant also claimed that, prior to arranging the policy, he was provided a brochure that supposedly indicated that the coverage being offered even went beyond Asia and Oceania and was actually global.

“The IFSO, Karen Stevens, found that the financial adviser was not the insurer’s agent and, therefore, the insurer was not responsible for any incorrect advice the adviser gave [the man],” the IFSO scheme told Insurance Business

“Furthermore, when [the man] arranged the insurance, the insurer was not told that the only reason he wanted to change was because of his understanding of the worldwide nature of the health insurance.”

Additionally, the abovementioned brochure was deemed not likely to have misled, as it reflected the policy’s actual wording. As for the term “Australasian” in the context of the proposition, IFSO Karen Stevens found that it was made clear that the coverage only pertained to Australia and New Zealand.

Stevens declared: “Never make assumptions about insurance policies. If you are unsure about the extent of cover, ask about it, and make sure you read the policy so you know what you’re insured for. If you leave it until you want to make a claim, it’s too late.”

For the IFSO scheme, which did not uphold the complaint, the insurer did not misrepresent the coverage.

In the year ended June 30, 2021, the free-to-consumer scheme received 3,626 complaint enquiries. These were questions or issues the scheme was contacted about during the period – the majority of which related to scope of cover, premiums, customer service, uninsured third party, and policy exclusion.

Meanwhile the number of accepted complaints for investigation in 2020-2021 stood at 334. The top concern for accepted complaints was policy exclusion, followed by scope of cover. Broken down per sector, most of the complaints came from fire and general (199), while 105 was the count for health, life, and disability.

Of the closed complaints for the 2021 report, 80% were not upheld; 13% were settled; 5% were upheld; and 2%, partly upheld.

“We’re an objective third party,” reads the IFSO scheme’s service charter. “We don’t act as an advocate for either party and we don’t take sides. That means we cannot give you legal advice, or tell the financial service provider to pay a claim or wipe a debt just because that’s the outcome you want.

“We try to resolve complaints by getting an agreed outcome between you and the financial service provider. If that’s not possible, we make a decision. Our decisions are based on what we think is fair and reasonable in all the circumstances, having regard to the law. We can’t punish financial service providers, because we are not a regulator.”

Funded through participant fees and levies, the IFSO scheme uses negotiation, conciliation, and mediation to try to reach an agreement between complainants and providers, where possible. The disputes resolution service can only consider complaints about scheme participants.