Report sheds light on insurance and non-disclosure

Report sheds light on insurance and non-disclosure | Insurance Business New Zealand

Report sheds light on insurance and non-disclosure

We have reported that complaints to the Insurance & Financial Services Ombudsman (IFSO) Scheme reached a 20-year high, with insurance making up the bulk of the total. Now, it has been revealed that non-disclosure has also been identified as one of the biggest areas of complaints to the insurance ombudsman for the year 2017-2018.

In an article with NZ Herald, IFSO Karen Stevens said a review of the law on non-disclosure is long overdue.

The publication detailed the case of a business owner, who injured his hand at work and had his insurance claim turned down after failing to disclose his mental health and alcohol issues. His complaint was also not upheld by IFSO following advice from independent insurance underwriters that the medical history is material to the decision to insure the man.

“Non-disclosure means nothing to a consumer until he/she makes an insurance claim, only to find the insurer will not pay it,” Steven explained. “Strictly speaking, the law does not provide any remedy for a consumer who has failed to disclose (either intentionally or not) material information — materiality being determined on the basis of what would be material to a prudent underwriter in assessing the risk.”

Stevens reportedly said it was time for a change and that legislation on non-disclosure similar to that in Australia and the UK would help protect consumers who unintentionally leave out information.