Several months ago I watched episodes of Fair Go which made me ponder this question. The episodes have annoyed me, not least because only one side was really told but because this makes our industry look bad and it’s absolutely not!
After over 20 years’ experience in the insurance industry and also as a client who has had a family member on an income-based insurance claim I feel I’m qualified to make a comment on this subject.
I do feel for the man on Fair Go as living with a continuous illness is draining both emotionally and financially.
Often in non-disclosure cases the reasons given are just part of the issue and there is much more to be told. There are a lot of caring individuals in this industry from the staff of the insurance companies to the advisers and their teams too.
All too often we are criticized for the work we do but the majority of clients are happy with their choices and support. Insurance Companies are not in business to get out of claims, they want to pay their claims. I’m quite sure the eighteen clients we currently have on claim will agree with me.
Something to keep in mind when you apply for insurance is that the insurance company are being asked to make a decision today, for a future claim, based on the medical information they have been provided with. Your Doctor has the same information but because they have time on their side they don’t see the same significance in the information. Slightly elevated cholesterol is a concern to an insurance company but a doctor may tell you to watch what you eat and exercise. If you don’t watch your weight and exercise the doctor has time to give you medication. The insurance company only come back into the picture when you suffer a heart attack because you didn’t control that slightly elevated cholesterol. And that, is exactly the reason they ask you to disclose everything.
The Fair Go episode focused on Partners Life and yet their proposal clearly states the following in bold above the medical questions:
"Are you currently suffering from, experiencing symptoms of, or being treated for, or if you have ever suffered from, had symptoms of or had treatment for any of the following:"
Here at SGA we explain it to our clients in this way, have you ever had, think you might have, talked to your doctor about anything below, have you had blood tests, what were they for, what did your doctor say. We ask about smears, mammograms, PSA tests and lots of other tests that we know clients have. We also ask our clients if we pulled your doctors notes today what information would we find?
Unfortunately, the man on Fair Go did not disclose he had symptoms of sleep apnoea. Maybe the symptoms at that time weren’t too bad and the doctor was playing a wait and see game, however it played out, the discussions with his doctor would still be noted in his file. This fits under ‘had symptoms of ‘.
Your sign-off to the medical information disclosed is the Declaration & Consent page at the back of a Partners Life proposal which states the following;
“The information provided in this application whether in my/our handwriting or not is true and complete and I/we have not withheld or misstated any material fact.”
After twenty plus years in the insurance industry and numerous claims, SGA have only ever had four Life, Trauma or Income based claims declined. The following two are fairly standard examples;
1. One was because the client wouldn’t let us be there when he completed the proposal. He forgot about his high Cholesterol of 14 and he suffered a heart attack shortly after the insurance commenced. In fairness to the insurance company concerned, even though material information was non-disclosed they did try and pay this claim. It all came down to a blood test the doctor asked the client to have. The client didn’t have the blood test, and this meant his cover could not be re-underwritten from inception which may have meant his claim was paid.
2. The second client completed his proposal with us. His claim was declined because the client ‘forgot’ he had a seizure the night before our appointment. His wife was also present at this appointment and neither remembered the previous evening’s activities.
The two claims discussed above were with a well know insurance company which has been around long before Partners Life came into the market.
The two episodes on Fair Go focused on a man who has had his insurance claim declined because he omitted to disclose medical information on his insurance proposal. I can appreciate how frustrating this is, but one does have to question how this is unfair.
In my opinion this is unfair focus on Partners Life as a company. I say this because from my experience every insurance company would have refused this man cover had they had the correct information at the time of initial underwriting.
I know that Partners Life have paid a claim for a client whose doctor failed to inform him that one of his blood tests was slightly elevated.
So, what happens when you complete a proposal?
These forms can take at least an hour to complete for someone who has very few medical issues. I’ve seen them take much longer and ‘yes’ we all agree they are painful! In the old days it was a two-sided A4, now it’s a 30 odd page booklet. But to be fair unless you have a comprehensive cover or lots of medical disclosures you don’t have to complete all of the pages.
Always use a Broker!
As I mentioned above, we are experienced in asking the right questions to get informative answers. Don’t risk completing it on your own, SGA are here to help. It’s what we do best.
What happens to your proposal?
The information is forwarded to the underwriting team at the relevant insurance company. From the disclosures in the proposal the underwriter decides on what further information is required from the client or their medical professional.
You might ask why they don’t just request all your medical records to stop non-disclosure and there are several very good reasons.
- How much it costs to get medical information from your doctor? Next time you go to the doctor ask them how much they charge the insurance company for any information they release. If the Insurance Company had to request full notes on every client this would certainly result in an increase in premiums.
- Some medical notes can be over well over 50 pages and that’s just for the information that has been disclosed. Image how long it would take an underwriter to read every medical note on every client who applies for insurance. This would make the time it takes to underwrite a proposal much longer than it is now and we would all be complaining!
- Then there is the Privacy Act. The Insurance Company can request information on anything disclosed in the proposal. Some doctors will send only what is asked for, other doctors will send more than requested. How much information do you want the Insurance Company to have on you? Everyone interviewed on the Fairgo program said they want the Insurance Company to have access to all their medical information, but do they really? Have they said this now they see what non-disclosure could mean? Would everyone’s opinion be the same had this issue not have been televised?
So, what happens at claim time?
The insurance company will request medical information from the doctor. The insurance company doesn’t do this to get out of a claim, but to make sure you meet the claim criteria and you get the maximum out of your claim.
The medical information requested can go back for a long period of time, in our own case it was over 10 years.
An underwriter then re-underwrites your insurance cover.
They look at the cover originally requested to see whether the decision made at the initial stages of underwriting was correct i.e. should cover have been offered at all? Are there premium loading's or exclusions? Have they been applied correctly?
If there are irregularities in the medical information the Underwriter, then decides how it affects the original cover offered. It is important to note we are discussing medical information dated from the policy inception backwards.
In the case of the man on Fair Go, he would never have been offered any income-based cover due to his sleep apnoea. This means his cover is void and is cancelled at this stage.
A loading or exclusion may be applied retrospectively. A retrospective loading/exclusion is applied to only the relevant cover. I have seen retrospective premium loading's applied to a policy. The premium is therefore more expensive than the premium the client has been paying which in theory causes arrears on the policy. In my experience the insurance company write off the arrears and I have never seen a client asked to make up the difference in the premiums. Obviously going forward all premiums are at the new rate.
The Underwriter then considers the reason the claim was made and if any of the medical information provided was material to the original underwriting decision. If all the medical information is in order, the claim is then passed back to the Claims Team. Provided none of the retrospective premium loading's or exclusions have any bearing on the reason for the claim then this will not affect the claim submitted. If you non-disclose high blood pressure but your claim is for a cancer, then it is unlikely the claim will be affected.
What does this episode of Fair Go teach us?
Use a Broker to help you complete your insurance proposal! SGA are trained in the questions to ask you to make sure the insurance company has as much information as possible. This also stops us needing to ask you endless boring questions just to give the Underwriter the full story.
NEVER complete an insurance proposal online or on your own, it’s too easy to misinterpret the wording.
SGA’s practice is to help you disclose everything, even if it seems inconsequential and minor! That one disclosure may seem minor, but it may just be the difference in getting a claim paid. We will send you copies of the forms you completed, so you can check them.
If you think you have forgotten to disclose some medical information, then contact your Broker or Insurance Company. The sooner you do this the better, we often find the additional information makes no difference but it’s great to have on file just in case!
When you go to the doctor make sure you read what they have written on your notes, and challenge it if you think it is incorrect. You may be busy and feel a bit tired, but the doctors’ notes state stressed. That one misinterpreted note will now dictate the terms you will be offered for any future insurance. We also find that some clients don’t know the results of tests but because the doctor hasn’t contacted them they assume it’s ok. Make sure you know.
If you feel happier, get your notes off your doctor and submit them with your proposal. We do not have a problem if you do this but your doctor’s receptionist may not feel the same way. By the way, it doesn’t get you out of completing the medical questionnaire.
Likewise ask ACC for your ACC history and we will submit it with your proposal.
I have read some interesting comments on the Fair Go Facebook page and indeed our local Facebook pages regarding insurance. There are a lot of keyboard warriors out there who are completely misinformed. Contrary to what some people think, if you suffer an illness after your insurance is put in place then this does not affect the policy you have in place. Assuming of course you have disclosed everything.
Always use a Broker with experience! Not only does this count when it comes to claim time but things can be miscommunicated and if your SGA Broker feels that the insurance company can do better (whether during underwriting, insurance terms or a claim) we will push them to!
And finally, make sure your Insurance Broker offers a claims service- from personal experience the claims process can be very stressful and having someone in your corner to help you when you need it most takes away some of the stress. Never try and do a big claim on your own.
Earlier this year our team at SGA assisted a client with his Trauma Claim, despite his reservations we were all happy with the positive outcome- including Partners Life! In closing I will let one of our SGA clients have the last say….
"I have been insured by Partners Life Insurance through Steven Green & Associates (SGA) for around 5 years. My insurance policy is a life insurance with trauma cover attached.
Last November, out of the blue, I suffered a heart attack and had to have a stent inserted into one of my coronary arteries.
I contacted Steven Green & Associates on my release from hospital to discuss what I could potentially claim. It was a difficult time coming up to Christmas as the company I worked for closed down for 3 weeks over that period which meant I was potentially going to be off work for eight weeks, with only sickness and holiday pay for 4 of those.
Ruth Green advised me that there would be some background checks done with my doctor to verify that the information I gave when I first took out the policy was correct. This is standard procedure for any insurance company. She also advised me that generally the insurers paid around 25% of the total cover if one stent had been inserted.
Unfortunately for me I had been registered with 4 different practices since I arrived in New Zealand 10 years ago, and they all had to be contacted which took some time.
Meanwhile I was getting increasingly frustrated as everyone who I spoke to about my experience was under the impression that it was taking so long to process my claim because the insurance company was either hoping I would get tired of waiting and not pursue it any further, or they would find some trivial reason not to pay out.
I spoke to Steven Green & Associates (SGA) on numerous occasions about my concerns of this and each time they remained totally professional and advised me that wasn’t the case and this was just procedure. Then after only a few weeks I finally got the call that Partners Life were going to pay the full amount I was covered for.
I have total faith in Steven Green & Associates (SGA), will continue my life insurance with them, and not hesitate to contact them if I need any other cover."