In its quarterly newsletter, the Ombudsman for Short-term Insurance (OSTI) provided an update on news and events from the office of the Ombud, a few case studies and consumer tips.
Number of Complaints
In the Ombudsman’s Briefcase: Issue 3 of 2020, the Ombud revealed that it saw a decline in the number of complaints lodged with the office during the initial months of the lockdown but anticipated an increase in complaints as the lockdown restrictions were lifted. As expected, there was a 5% increase in complaints submitted to the office between March and August 2020 when compared to the same period last year. Between March and August 2020, 554 of the complaints received related to the COVID-19 pandemic and resultant lockdown, with most of the complaints concerning business interruption and travel insurance claims.
Case Studies
The case studies in his issue deal with cover around personal accident, travel insurance and insurance for mobile electronic devices focusing on a failure to bring claims within the ambit of policy wordings. The case studies are intended to provide guidance and insight into the way the OSTI deals with complaints. There are some important lessons that advisors can take from these cases to avoid similar issues arising when a client has a claim. We take a closer look at a case study involving a dispute relating to a disability claim.
Rejected Disability Claim
Mr. M had sustained injuries to his right leg, ankle and left elbow after he fell off a truck whilst on duty in 2010. Mr. M had approached his insurer shortly after the accident for a disability claim, however his claim was rejected as he was not permanently and totally disabled as this stage. In 2011 Mr. M attempted to claim again and was once again rejected.
In 2017, Mr. M approached the insurer once more and was advised that because he was not permanently and totally disabled within a 24 month period, as stipulated in the policy, he did not enjoy cover and, further, that his claim had prescribed. It was after the rejection in 2017 that Mr. M approached OSTI for assistance.
The insurer’s rejection of the claim was upheld by OSTI. However, Mr. M requested that OSTI’s decision be reconsidered on the grounds that he was able to demonstrate that he was permanently and totally disabled already in 2011. The matter was reviewed by the Escalation Committee, which consisted of the Ombudsman, the Deputy Ombudsman and four Senior Assistant Ombudsmen who were tasked with determining whether Mr. M was permanently and totally disabled as required by the policy, whether he complied with the 24 month time limitation and, if so, whether his claim against the insurer had prescribed.
Policy wording
The policy set out various definitions. The insurer relied on the following policy wording to substantiate its rejection of the claim:
- “Permanent Total Disablement means total and absolute disablement which entirely prevents the Insured from engaging in or giving attention to his/ her usual occupation or any occupation for which the Insured Person is qualified or has received specialised training in and which will in all probability be lasting and continuous for the lifetime of the Insured Person. The diagnosis and determination of the Permanent Total Disablement must be made by a physician and must be continuous and permanent for at least 24 consecutive months from the onset of the disablement. Documented evidence of the incident that caused the Permanent Total Disablement is required. The degree of Permanent Total Disablement will be determined immediately after it is established or as soon as it can reasonably be assumed that there will be no further improvement or worsening of the Insured Person’s condition in consequence of the Accident, but not later than 24 months from the Date of Loss.
- Permanent and Total Loss means in reference to an arm or a leg or a hand or a foot or fingers or toes – the loss by physical severance or the total and permanent loss of use of said member.
- Sweeper Clause means in the event of a Permanent Disability not being listed under Partial Disability Insured Events in the Table of Benefits, [X] will indemnify the Insured Person up to a maximum of 50% of the Permanent Total Disablement Benefit.”
Findings
The Committee gave regard to the definition of permanent and total disablement as contained in the policy wording and found that it was a requirement that the permanent and total disablement must be diagnosed within 24 months of the event giving rise to the disability. The Committee also considered two medical reports. The one medical report stated that Mr. M first became unable to carry out his occupation on 28 October 2010 (the date of the incident), however Mr. M was able to resume his occupation on 4 April 2011. The other medical report dated 2017 by a different doctor confirmed Mr. M had been fit for normal work since 22 May 2012. The Committee further considered the claim forms that were submitted to the insurer in 2017 which confirmed that Mr. M was employed at the time and that his occupation and work description was the same before the loss as that during February 2017 with the exception of lifting heavy objects.
The Committee found that even if Mr. M was able to overcome the 24 month time limitation, he had failed to bring his claim within the ambit of the policy wording by demonstrating that he was permanently and totally disabled. Similarly, in order to enjoy cover under the Sweeper Clause as described above, Mr. M would have needed to demonstrate that he was permanently disabled which Mr. M could not do. Based on this reasoning, the issue of prescription did not arise for consideration. Mr. M’s complaint was dismissed.
Advisors are encouraged to go through policy documents with their clients and ensure that the client understands policy wording and is alerted to any special clauses, provisions, or exclusions especially as circumstances change.