NZ Ombudsman backs travellers

Recent cases judged by the New Zealand Insurance Ombudsman have shown that it is critical of travel insurers being too keen on rejecting claims on the basis on non-declaration of pre-existing conditions. Mandy Aitchison reports

Case notes released by the Ombudsman show that where there is doubt that the condition was not declared, or the relevance of the condition to the claim is in doubt, policyholders should persist in challenging the denial of their claim. Although not all claimants who took their case to the Ombudsman won, there have been a number of recent cases where the regulator has ruled against insurers for stretching the policy exclusions too far.

One particular case involved a man who bought travel insurance in January 2009 to travel to Europe and the Middle East that September. In April of that year, though, he was diagnosed with cancer, which resulted in cancellation of the planned trip, so he claimed on his policy. The claim was denied on the grounds that the cancer was a pre-existing condition. The insurer’s basis for denying the claim was a biopsy the man had in 2008, the results of which were ‘a little bit suspicious’ and required a follow-up biopsy that identified the cancer. The Ombudsman judged that the man did not know he had cancer when he bought the policy, and therefore, the claim should be paid.

In another example of pre-existing-condition confusion, an insurer argued that the term ‘pre-existing condition’ covers a health problem the policyholder had suffered in the past, even if that condition was not present when the holder bought the policy. The female policyholder suffered a hernia when picking up her suitcase, but as she had previously had a hernia, the insurer refused her claim. The Ombudsman, though, ruled that as the woman had not had a hernia at the time of taking out the policy, the claim should be paid, and if the insurer wanted to exclude cover either directly or indirectly related to any previous medical condition suffered by the policyholder, the wording in the policy should reflect that.

The final case highlighted that even if the policyholder is suffering from some symptoms of an illness, if they are mild, the Ombudsman could still judge the policy as valid. A woman was diagnosed with multiple myeloma whilst on holiday in the UK having previously undergone blood tests in Australia that had shown abnormalities. The insurer rejected the woman’s claim on the basis that she had not told them about the results of the tests, but the Ombudsman ruled that as the abnormalities were relatively mild, no actual cancer diagnosis had been made.

In further confirmation that insurers need to carefully examine the wording of their policies, the Ombudsman also ruled in favour of a consumer who was stuck in Chile after a general strike that grounded Chilean planes. A traveller from New Zealand was stranded in Punta Arenas as a result of the strike action, and paid out for accommodation and food, which he expected his insurer to cover when he returned. The insurer, though, denied the claim on the basis that his expenses had been incurred as a result of civil unrest, which was a named exclusion on the policy. The traveller took his case to the Ombudsman, saying that the policy wording of ‘civil unrest’ was ‘designed for cases of the magnitude of recent events in Tunisia or Egypt or Libya’, not travellers having to make alternative plans due to a general strike taking place. The policy wording said that no loss would be covered that was ‘directly or indirectly caused by, resulting from or in connection with civil commotion assuming the proportions of or amounting to a popular rising, regardless of any other cause or event contributing concurrently or in any other sequence to the loss’. In the Ombudsman’s opinion, while a strike could be viewed as ‘civil commotion’ or ‘popular’, as per the terms of the policy, it could not be seen as a ‘rising’.