Insurance Company Acting Unfairly? Help is available?

The Australian Financial Complaints Authority (AFCA) was established to provide a quick and accessible method for resolving disputes when an insurance company denies a claim. This article focuses on income protection and total and permanent disability (TPD) cover, typically arranged through a superannuation trustee, and does not cover workers compensation or motor vehicle third-party (Green slip) insurance.

A recent AFCA decision demonstrates how the tribunal can safeguard consumers against arbitrary claim rejections.

Here's what occurred:

Barry (this was not his actual name), a self-employed individual, bought income protection insurance to safeguard against income loss caused by injury. In 2013, an injury prevented Barry from working, leading him to submit a claim under his policy. The insurer validated the claim and began providing a monthly benefit.

10 years later, Barry claimed that the insurer had miscalculated his benefit, resulting in underpayment. The insurer admitted to the miscalculation but argued that they had been over paying Barry and planned to decrease future payments to recover the overpayment.

The disagreement was submitted to AFCA, which concluded:

• The insurer acted unjustly by trying to lower payments ten years after the initial claim, particularly since it was unreasonable to expect Joe to keep business records for such an extended period.

  
  

• Similarly, Barry was unable to seek a recalculation after such a lengthy delay due to the same evidentiary reasons.

  
  

• The insurer was instructed to restore the initial monthly payments and compensate Barry with $2,500 for the distress caused by the threat to decrease his benefit.

  
  

This decision underscores AFCA’s dedication to fairness and justice. Although AFCA cannot render decisions beyond the policy's terms, it guarantees that these terms are applied fairly.

AFCA provides dispute resolution options that might not be accessible in court, where strict legal principles are enforced.

We advise insured individuals who believe they have been unfairly treated by their insurer to consult for advice before agreeing to the company's decision. If we suggest filing an AFCA application, we can help prepare compelling submissions backed by solid evidence and consistent with AFCA’s decision-making principles.

Solution..

If you feel as though you are being misled by your insurer, contact our office on

07 56200558 for a free consultation with our team of lawyers to discuss how we can help with your legal needs. Angelika Patras from our office is our senior lawyer responsible for Insurance & TPD disputes.

Disclaimer

This article is provided for general information purposes only and does not constitute legal advice. The law in this area is subject to frequent change, and readers should verify whether any updates have occurred since the time of publication. While care has been taken in preparing the content, readers must exercise their own due diligence before acting on any information. Professional legal advice should always be obtained for specific circumstances.