AFCA Upholds Fair Evaluation in Insurance Claim Dispute
AFCA Upholds Fair Evaluation in Insurance Claim Dispute
2
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
The Australian Financial Complaints Authority (AFCA) has directed MetLife to re-evaluate a policyholder’s income protection claim, focusing on justified interpretations of mental health exclusions.
In a case brought to attention, the claimant, who secured his coverage via superannuation, applied for a $9300 monthly policy intended for a two-year coverage span back in March 2020.
The claimant's struggle began in August 2019 when his general practitioner declared him medically unfit for work due to "significant psychological distress," primarily catalyzed by workplace bullying.
As a recourse, the individual took personal leave in August followed by paternity leave in October of the same year. Although he resumed work in October 2020, he had to suspend his professional engagements again by December.
In September 2021, the claimant submitted a request for income protection benefits, citing an adjustment disorder diagnosed with mixed anxiety and depression as the reason inhibiting his capacity to work.
However, MetLife rejected the claim in July 2022, accusing the claimant of inaccurately representing his medical history. The insurance provider argued that the applicant falsely stated he hadn’t been “diagnosed with or sought medical advice or treatment” for psychological issues at the time of application.
MetLife asserted that the applicant already exhibited psychological distress, hindering his work capability long-term, and had they known, the policy would not have been issued. They determined his stress related symptoms equated “to a psychological condition.”
The claimant countered, maintaining he neither identified with a history of psychological ailments during his application process, nor would a typical person in his context.
AFCA elaborated, saying although the complainant experienced "significant stress in 2019," ordinary perception does not always align stress with a psychological or clinical mental health condition. The inquiry focused on awareness of any conditions at the time, not diagnosis existence.
AFCA highlighted that the treating GP did not insist on mental health assessments commonly expected when symptoms emerge, and the sole "treatment" employed was voluntarily steering clear of the work environment, a decision lacking a formal diagnosis.
They elucidated that “Even if the answers given were not actually true (because with the benefit of hindsight the complainant was in fact suffering from a psychological or mental health condition), the panel accepted a reasonable person in the circumstances would also have reached the same belief as the complainant did.”
Following the conclusion, AFCA mandates MetLife to process and revisit the claimant’s submission and communicate the outcome to Hostplus, the coverage trustee, within a 60-day frame. The original content was reported by the Australian Financial Review.
Published:Friday, 1st Nov 2024 Source: Paige Estritori
Please Note: If this information affects you, seek advice from a licensed professional.
Australia's life insurance sector is witnessing a significant transformation, with mental health conditions emerging as the predominant cause of Total and Permanent Disability (TPD) claims. Recent data from the Council of Australian Life Insurers (CALI) indicates that mental health-related TPD claims now constitute nearly one-third of all such claims, highlighting a profound shift in the factors leading Australians to exit the workforce permanently. - read more
The Australian life insurance industry has reported a remarkable financial turnaround in the fiscal year 2025, with earnings more than doubling to $360 million, according to the latest figures from the Australian Prudential Regulation Authority (APRA). This 210% increase in profit after income tax marks a significant recovery from previous years' losses and underscores the sector's resilience and adaptability. - read more
Australia's general insurance sector has reported an unprecedented after-tax profit of $6.1 billion for the year 2024, according to KPMG's General Insurance Insights report. This figure is three times higher than the five-year average of $2 billion, marking a significant milestone in the industry's financial performance. - read more
In 2024, Australia's insurance industry reported an after-tax profit of $6.1 billion, a significant increase from the five-year average of $2 billion. This surge in profitability is attributed to substantial premium hikes and a year with fewer severe weather events. - read more
In today's ever-evolving business landscape, the significance of environmental sustainability and legal accountability is increasingly paramount. Australian enterprises, in particular, are encountering a growing need to understand and manage environmental liability. This reality not only influences corporate image but also carries substantial financial and legal ramifications. - read more
Running a small business can be both rewarding and challenging. One of the key challenges is the variety of risks that can arise unexpectedly. These risks can range from financial uncertainties to operational hiccups, each potentially impacting your business's success. Understanding these risks and preparing for them is crucial for the longevity and sustainability of any small enterprise. - read more
Welcome to our comprehensive guide on liability risks for small businesses in Australia. The world of business is fraught with challenges, and one often overlooked aspect is the array of potential liabilities that can stifle growth or even lead to catastrophic financial loss. It's crucial for small business owners to grasp the critical role that insurance plays in the protection and longevity of their ventures. - read more
Public liability insurance is a key consideration for business owners in Australia. This type of insurance helps protect businesses against claims made by third parties for injuries or property damage. But what exactly does it do? In simple terms, public liability insurance covers legal costs and expenses, as well as any damages awarded, if your business is found liable for an incident. - read more
Start Here !
Knowledgebase
Term Life Insurance: A type of life insurance policy that provides coverage for a specified period, such as 10 or 20 years.
