The corporate watchdog has taken court action against major life insurer TAL after the group allegedly unfairly denied a woman suffering from cervical cancer’s life insurance claim because she had previously had depressive symptoms despite the two conditions not being linked.
The Australian Securities and Investments Commission launched Federal Court action on Tuesday against TAL alleging it breached the law by misleading the customer about how her policy worked.
ASIC alleges TAL made false representations to its customer by implying in an information pack sent out to customers that it had the right when assessing a claim to demand customers to provide full authority to the insurer to obtain all medical records when it did not.
The woman’s experience dealing with TAL was a key case study at the banking royal commission in 2018. Her identity is subject to a non-publication order from the commission.
ASIC alleges that the woman made a claim in 2014 after being diagnosed with cervical cancer for income protection under her TAL policy.
TAL then allegedly told the woman her claim had been accepted. At the same time, ASIC alleges TAL launched a secret investigation into all of the woman’s possible previously existing conditions to see whether it could deny the claim because the woman had made a false representation about her health.
ASIC alleges TAL’s review went well beyond an investigation into the woman’s gynaecological health and delved into all parts of her medical history. TAL obtained during this investigation a letter from the woman’s GP which stated she had seen a psychologist between early 2008 and mid 2009 after the break up of a long term relationship.
ASIC alleges TAL then denied her claim based on this previous medical condition and stopped payments. It allegedly told the consumer they would have never issued the policy if it had known about her unrelated depressive symptoms.
The regulator alleges that along with the denial of the claim, TAL did not allow the woman to respond to the investigation or to explain her situation.
ASIC also alleges that in sending a letter to the consumer it accused the consumer of breaching her duty of disclosure and her duty of utmost good faith under the Insurance Contracts Act.
The regulator is seeking fines and declarations from the court.
Source: Thanks smh.com