Where do you turn when insurers say ‘no’?
Life and business insurance are important safety nets, but what if they fail? Brought to you by Maurice Blackburn Lawyers.
By Hayriye Uluca
In a fast-paced world with relentless pressure to perform at the top of our game in both our personal and professional lives, it is no surprise that mental health issues are at epidemic levels. Each year, about one in five Australians will experience a mental illness, making mental illness the third leading cause of disability in Australia. All too often, this leads to a temporary or even a permanent inability to work or run a business.
Employees and business owners alike need to know that if injury or illness, including mental health issues, impacts their ability to work, they can rely on their life, disability and business expenses insurance policies to respond as they would expect, at their critical time of need.
But what happens if they don’t?
The Hayne Royal Commission exposed major problems within the insurance industry and countless examples of insurers avoiding the payment of genuine claims by applying outdated policy terms, adopting narrow and prohibitive policy interpretations and digging for ‘dirt’ to discredit claimants.
Mental health and non-disclosure
Traditionally when you buy insurance, you take out a policy directly with an insurer and an application form is completed where you disclose your pre-existing medical history. The insurer then reviews your application as part of its underwriting process and determines whether to offer you a policy and, if so, on what terms.
One of the most common non-disclosure scenarios we encounter is that after the insurance application is accepted and you have been paying premiums for many years, the insurer makes a retrospective and self-serving decision to cancel the policy by asserting you failed to disclose all matters relevant to the insurer’s risk in the original application form, completed years earlier.
An insurer usually turns its mind to non-disclosure in the application form, after a claim is made and after years of receiving premiums, at the precise time when the policy holder is depending on the safety net they assumed they could rely on when unable to work.
More often than not, it is the suggestion of a pre-existing mental health condition which insurers point to when voiding a policy, through citing scant attendances at a GP or a counsellor for complaints relating to grief or acute stress, often following traumatic but common incidents like the death of a close family member or a relationship break-up.
The good news
It’s important to remember that just because an allegation of non-disclosure is made and an insurer is threatening to cancel a policy, it does not necessarily mean that it is a valid decision. The threshold an insurer must meet in order to cancel a policy due to non-disclosure is relatively high and it must be supported by underwriting evidence.
Upon challenge, we regularly see that the allegations of non-disclosure are not supported by evidence and an insurer simply cannot meet the requisite threshold, thereby making the decision to cancel a policy void.
“The threshold an insurer must meet in order to cancel a policy due to non-disclosure is relatively high.”
As the leading specialist superannuation and insurance claims firm in Australia, Maurice Blackburn Lawyers provides access to the right advice, at the right time, so that you or your clients are not left out in the cold at a time of need, the insurer remains accountable and the policy acts like the safety net that it was intended to be.
Hayriye Uluca is senior associate and acting state litigation leader, Maurice Blackburn Lawyers.
For more information on Maurice Blackburn Lawyers’ superannuation and insurance claims services, contact Hayriye Uluca on (03) 9605 2648 [within Australia].