CommInsure was able to rely on the section of the Insurance Contracts Act that deals with misrepresentation to refuse cover. The case went to court after the Australian Financial Complaints Authority (AFCA) initially ruled in favour of the insurer, but the Federal Court sent the matter back for redetermination.
The dispute detailed
The heart attack disclosure dispute concerned a doctor who had obtained coverage for terminal illness claim. They had filled out a form in March 2011 that asked about previous heart troubles. The doctor answered "no" to this question, but court proceedings later revealed that they had had surgery in 1999 and stents were placed in their coronary arteries after a heart attack. Following the filing of a terminal illness claim in March 2017, the doctor passed away from heart failure the next month. Although the default coverage claim was accepted, the additional cover was declined by CommInsure Life, which now forms part of AIA.
Court's ruling
AFCA initially considered that the misrepresentation section of the Insurance Contracts Act didn't apply. However, the Full Court appeal found that CommInsure was within its rights to rely on section 29 of the Act to refuse extra cover. This was because the doctor had made an additional misrepresentation by failing to correct fraudulent information prior to December 2011. In their ruling, Justices Angus Stewart, John Halley, and Catherine Button pointed out that the factual findings that underpinned the decision's conclusion on the doctor's misrepresentations were valid.
Potential implications of the ruling
The court's decision could potentially hold wider implications that extend to life policyholders outside of the group sector. According to Principal John Berrill at Berrill and Watson Lawyers, parts of the ruling's findings are disconcerting since they affect the continuing duty of disclosure after a policy commences.
Conclusion
This ruling has significant ramifications, and policyholders should always ensure that they provide accurate and correct information when applying for insurance. Any misrepresentation or withholding of information can lead to a claim being denied, especially if an insurer discovers that it was intentional or fraudulent. Policyholders should also ensure that they keep their insurance provider informed of any significant changes in their health or circumstances, as this information can affect the underwriting process.
