GoodReturns | NZ’s financial adviser news-item centre

2 Comment

Save Story

Practice Management

Interpreting policy provisions – part 1

Thursday 2nd of December 2010

Background

In 1992, C arranged life insurance with total and permanent disability and critical illness benefits, with P.

In January 2009, C made a claim to P, because he suffered a heart attack in December 2008.

P declined the claim, because it did not believe C's heart attack had been diagnosed, based on "new electrocardiographic changes" ("new ECG changes"), as required by the policy.

C believed he had "had new ECG changes" and, therefore, met the policy definition of a "heart attack".

Assessment

The policy was the basis of the contractual relationship between C and P.

The policy did not simply state P was liable for a claim, if C had a heart attack.

The policy set out precise criteria, which had to be present for P to consider C's heart attack a "heart attack" in terms of the policy.

For P to be liable for the claim, the diagnosis of C's heart attack had to be based on the following (as required by the policy definition):

"a history of typical chest pain"; and
"new electrocardiographic changes"; and
"elevation of cardiac enzymes".

C's hospital discharge summary stated he "[p]resented ... with ‘chest heaviness'" and was diagnosed as suffering from a "NSTEMI". As such, C's heart attack was diagnosed, based on "a history of typical chest pain".

A Cardiologist examined C's ECG recordings and advised that "none of them show[ed] changes characteristic of myocardial infarction (or myocardial ischaemia)". As such, C's heart attack was not diagnosed based on new ECG changes.

C's cardiac enzymes were not tested for elevation. However, in a letter to C, P said he had had "an elevation in Troponin (cardiac enzyme substitute)".

As such, P accepted the rise in Troponin I that C experienced as equivalent to an "elevation of cardiac enzymes" and considered that C's heart attack was diagnosed based on this elevation.

The medical evidence did not show any new ECG changes. Therefore, C's heart attack did not qualify as a "heart attack" as defined in the policy and C was not eligible for the heart attack benefit.

Result: Complaint not upheld

Comments (2)

Robert Oddy

How distressing for the insured and his family. But then, how many other insured folk believe, because of advertising and marketing material, that their insurance company will pay a claim when they have been advised by a physician that they have had a heart attack? While legally correct for the insurance company to deny payment of a claim when it does not meet all of a policy's multiple conditions, there is an obvious disconnection between the policyholder's understanding of his or her entitlement and what the insurer intended. And how many New Zealanders understand the medical terminology used in the policy as criteria? Insurers will be doing themselves an enormous favour by amending marketing and support material to make it clear such a policy does not cover all heart attacks. Better still, why not design policies upon which policyholders can rely for payment when trouble strikes? After all, isn't that the reason people take out insurance - so that they can rely upon the insurer to set them right when needed? A simple questionnaire will ascertain whether most people expect payment for a heart attack will eventuate if the attending physician, and especially a cardiologist, states they have suffered one. Premium adjustments might be necessary but surely such a change might avoid inducing additional stress on someone already unwell. And of course, the possibility of a subsequent claim under a life policy instead. Designing policies that clients can readily understand, trust and rely upon for payment when needed may well be the necessary trigger to reverse our nation's appalling level of under insurance. Who knows, the public might actually lift the trustworthiness rating of insurers as a result. Trust can take years to build but seconds to destroy

0 0

14 years ago

Lei Sun

Yet another failure by ISO to consider the underlying law and standards of insurance. Instead falling back to contract law as the industry prefer. Intent and purpose of the insurance to protect and expectations of the insured who pays premiums for years is extinguished by this trick of using contract law to analyse and assess a claim. NZ insurers repeatedly avoid claims by not looking for ways to pay a claim but rather how to avoid a claim - therein exists a basic breach of insurance good faith principles. As for trust - the entire relationship between policyholder and insurer is based on unspoken trust. Basically every person in the industry will argue this is not the case because it does not protect their patch of earth. The special circumstances create a fact-based trust relationship where we find in NZ every insurer abusing that trust in pursuit of profits by using contract definitions to evade claims. Insurance is for the protection of society. Insurers and their agents are charged with protecting the 'public interest' - but instead most are abusing it. One day the courts will wake up instead of being misled into the terms of the relationship are purely contractual which is so simple for lawyers to fall into if they know little about the industry circumstances.

0 0

13 years ago

Business insurance added to Xplan

2 min read

200 clients the max: Moore

2 min read