I helped expose insurers for denying medical claims. 15 years on, a court has found what they did is illegal

×

Error message

  • Notice: Undefined property: stdClass::$ds_changed in eval() (line 16 of /var/www/7/modules/php/php.module(80) : eval()'d code).
  • Notice: Undefined property: stdClass::$ss_search_api_url in eval() (line 20 of /var/www/7/modules/php/php.module(80) : eval()'d code).
  • Notice: Undefined property: stdClass::$tm_title in eval() (line 20 of /var/www/7/modules/php/php.module(80) : eval()'d code).

A court judgement handed down last Friday has delivered what years of promises from Australia’s life insurance industry have not – insurance that pays out on what it says it will.

Metadata
Provider: 
The ConversationThe Conversation
URL: 
https://theconversation.com/i-helped-expose-insurers-for-denying-medical-claims-15-years-on-a-court-has-found-what-they-did-is-illegal-206078https://theconversation.com/i-helped-expose-insurers-for-denying-medical-claims-15-years-on-a-court-has-found-what-they-did-is-illegal-206078
Retrieved on: 
Saturday, May 27, 2023
Information
Tags: 
Review, Insurance, Heart, Uniformity and jurisdiction in U.S. federal court tax decisions, Deformity, Industry, Commonwealth Bank, Code, Investment, Method, Policy, Corporations Act 2001, Federal court, Practice, Corporation, Sale, MLC, Blood, Australian Securities and Investments Commission v Rich, Four Corners, Diagnosis, Trauma, Death, Rheumatoid arthritis, ASIC, Life insurance, Health insurance, Medical device, Frankincense
Geotags: 
AUSTRALIA
Summary
Key Points: 
  • A court judgement handed down last Friday has delivered what years of promises from Australia’s life insurance industry have not – insurance that pays out on what it says it will.
  • I first raised the issue of outdated medical conditions within the insurance industry almost 15 years ago.

ASIC belatedly got tough

    • The banking royal commission was critical of ASIC’s performance in this area, and in 2021 ASIC commenced action against the insurer MLC for denying payouts to customers because it had failed to promptly update its definition for the insurance benefit of severe rheumatoid arthritis.
    • On May 18, Justice Moshinsky of the Federal Court found that MLC’s failure to promptly update the medical definition for severe rheumatoid arthritis had contravened the Corporations Act 2001.

Tight definitions quickly date


    There are generally four types of life insurance in Australia. The most common is death (or more euphemistically, “life”) insurance, which pays a benefit when a policyholder dies. The others are
    • More contentious are the definitions for total and permanent disability insurance and trauma insurance.
    • The problem with tightly and strictly-worded definitions is they can get out of date very quickly, whereas the policies they are written into can stay in place for decades.

Loopholes in the industry’s code

    • The new code due to come into effect in July 2023 continues to leave out existing customers, but adds a commitment that seems to offer new customers more.
    • Read more:
      New life insurance code riddled with loopholes

      The extra requirements include (and all of them are needed) joint deformity, and bilateral and symmetrical joint soft tissue swelling or fluid.

    • Friday’s judgement established that outdated medical definitions are a breach of the law regardless of the code, and have been for a long time.
Copyright: 
2023 The Conversation. All Rights Reserved.