Can insurers decline insurance without reasonable justification?

[Propagate]

We're in the process of sorting out life and TPD insurance. Mines all good, but were having issues with Emma's.

Emma suffered quite bad with regular, sever headaches for a few years. In the end she went to see the Doc and they ran a few tests, ultimately putting it down to soft tissue damage in her neck. She's been on a very mild dose of an anti depressant, (way lower dosage than when used as an anti depressant), but it is commonly prescribed for headaches stemming from the neck. It's taken long term and has worked very well once the dosage level was tweaked.

As it is likely she'll be on this medication for seem time, and is currently seeing the Doc for updates every 4 months, we told the insurance company during the application. They had to refer it to the underwriter.

The underwriter came back today, they will insure Emma BUT they have the huge exclusion list that basically excluded ANY issues stemming from a problem with her spine or neck, including such things as say she got hit by a bus and broke her neck or back, they won't cover it.

It ridiculous as the issue stems from a muscle in the neck and has nothing to do with the spine.

We went back to them and said it wasn't acceptable, would they look at it again and we'd be happy to exclude anything resulting from specifically that particular neck muscle but excluding anything to do with the spine is pretty ridiculous.

They won't budge.

We're looking at another company now, with a different underwriter and hopefully they will be more sensible.

It made me wonder though, can insurance companies refuse you cover for any reason they like, or do they have to have just cause in refusing something?

If they have to have reasonable grounds to refuse cover, is the an ombudsman that can be contacted to review?

Cheers.

 

[marg4000]

They are not refusing cover, simply limiting it as they see a pre-existing condition.

They are entirely within their rights, just as you have the right to go elsewhere.
Marg

 

[Aaron_C]

Ultimately the insurance company can refuse you cover for whatever reason as that is to comply with their policy and risk. The main issue arises when they try to weasel out of an appropriate claim after you've paid the premiums!

 

[Propagate]

Yes, refuse was the wrong choice of word but what I'm getting at was they have refused to cover a particular body part (spine) but not on any real basis, as the headache issue is muscle related.

If they can refuse particular cover for any reason they see fit then its a moot point, but if they have to justify the exclusion then personally I can't see how excluding any spinal issues can be fair?

 

[Angel]

They are an insurance company.

They can do whatever they like and no, it isn't fair. Why do you think their share prices are so high and they can afford to buy out banks?

 

[Propagate]

Bummer. Guess we'll just have to keep shopping around until we find a sensible underwriter.

The best bit was they wouldn't reduce the premium even though they were chopping out a large portion of risk.

 

[Truly Exotic]

Ultimately the insurance company can refuse you cover for whatever reason as that is to comply with their policy and risk. The main issue arises when they try to weasel out of an appropriate claim after you've paid the premiums!

ive heard on multiple occassions that staff at
insurnace companies are taught to decline every transaction that isnt "bloody obvious", and the majority of customers wont be bothered disputing it, which doesnt surprise me in the least

ive done a few insurance claims in my life and every time its been a farce, the worst is the assesors Cunningham and Linsday, dealt with them 3 times through different insurance companies

my last claim was the copper pipes from the side of the house stolen, hot water system damaged, and electrical cable stolen,

assesor comes out does a few reports, and about 3 months later, the claim is denied, so I call up and say wtf

get told, "well the assesor has deemed the claim invalid because I moved teh hot water system"

I was like "wtf, why the hell wouldnt I move a hot water system on its side, thats been knocked over in front of the back door and blocking it! and what the hell does that have anything to do with voiding the electrical component"

after a few threats and following up with the ombudsman, they paid out quick!

another time was, when the water pipe in the house burst and went everyhwere, after 4-6 months after being told to choose the type of tiles that we wanted to replace them with, after having multiple assesors out saying, its too dangerous to live here, we'll replace the floors, and the carpets, and by the way your floorboards have turned green from mould, off you go to a hotel and here is a shop to choose your tiles,

finally the guy who is supposed to do the work comes in and says "oh we arent replacing anything, ive seen houses flooded up to 2m, and once its dried out its fine, and many floorboards go green while they are getting built anyway"

I hate insurance companies!

 

[Shaneelastic]

Bummer. Guess we'll just have to keep shopping around until we find a sensible underwriter.

The best bit was they wouldn't reduce the premium even though they were chopping out a large portion of risk.

you wont find one

if you do let me know

 

[joanmc]

There is no sense in insurance companies. Once you have had just about anything they will load up your policy and exclude all sorts.
I am very careful to keep the same policy I got years and years ago as I have had an illness since I took it out so now I am a sure thing to die! I hadn't realised death was optional before

 

[BayView]

"We have the right to refuse service"

The prerogative of any business.

 

[MTR]

.
If they have to have reasonable grounds to refuse cover, is the an ombudsman that can be contacted to review?

Cheers.

I contacted insurance ombudsman regarding a $20,000 insurance claim which was rejected and then overturned, however it took 12 months.

As far as your situation goes not sure whether they can help but certainly worth a phone call.

 

[Propagate]

Cheers all.

BayView - Yes, I get you. I had wondered though, whether life insurance 'had' to offer cover, (within reason), and hence the post on here. Seems they can simply decide not to offer cover for any reason they see fit then.

As I said before, we're quote happy for a pre-existing condition to be excluded, but to blanketly exclude an entire body system based on something that actually isn't even related just seems wrong.

Emma went through the 40 minute telephone questionnaire again this morning, with a different company and different underwriter this time.

I'll report back here with the outcome when we get a response.

Cheers.

 

[Propagate]

Quick update for anyone interested.

Went through with AIA insurance this time, and as hoped/expected, they only excluded anything SPECIFICALLY to do with Emma’s headaches. Can’t remember the exact disclaimer, but it sounded fine.

Here’s the daft bit, the policy documents came yesterday. The cover letter states “this policy has a specific medical exclusion”….yep, no worries, but that exclusion isn't written up anywhere with the policy.

We thought maybe they just hadn't put it in the envelope so Emma called them today, this was their response “for privacy reasons we cannot and do not put in writing any exclusions on policies. Normally you are just told verbally.”.

So, you are expected to take on word what the cover excludes, and memorize all the jargon they shpeiled out on the phone 2 weeks ago when they excluded it, and hope that should you ever need to claim they have the specific exclusion on record their end!

Seems ridiculous to me, we’ll see if we can go higher and get it in writing, I can’t see how they can refuse to put in writing a specific exclusion on something as important as your life insurance policy.

 

[MarkB]

There is no sense in insurance companies.

In defence of insurance companies you need to understand this...

Unlike most everything else you buy - where the person who sold it to you is guaranteed a profit at the time of sale (unless, for whatever reason they've sold it at a loss) - insurance companies are not guaranteed a profit.

They price on expectations and actuarial tables and lots of other things...

For some insurance (eg. house and car, etc) it is a short-tailed cycle (claims are resolved very quickly with regards to each given year). So they know pretty quick if they're making money and they can adjust premiums almost instantly to a change in circumstance (such as a natural disaster).

For other types of insurance (workers compensation for one) it is actually years (even decades) later before they find out if they've made a profit on their underwriting (this is called long tailed insurance).

And if they have not made a profit, then they hope their investments have to make up the shortfall (easier said than done especially if you're relying on low risk investments like bonds, and interest rates are low).

So sometimes they have to be very discerning with regards to which risks they take on - even to the point of being ridiculously pedantic.

Life insurance is "guaranteed renewable" (ie. once you have it, it cannot be taken off you so long as you pay the premiums) - which means that an insurance company really only has one chance to make a decision on whether they want you as a client.

If you were in their shoes I expect you'd think twice and pause too...

 

[Propagate]

That's all fine and good Mark, and we have no issues at all with them excluding specifics, (we did take issue with blanketly excluding the entire cervical spine system based on recurring headaches).

The part I'm struggling to understand now is, why wont they give us in writing the explicit medical condition that they have excluded? They obviously have it in writing on their system, and we have accepted their offer of cover based on that exclusion, but to cite privacy issues as a reason not to provide the exclusion on paper? Seems odd.

 

[MarkB]

Only your insurer can answer that.

Irrespective of what they say, I believe you should be asking then if they will remove the exclusion once your wife has a clean bill of health (may require a waiting period).

Or, if they wont, look for better (fuller) cover at that time.

 

[marg4000]

Send them an email setting out exactly what you believe the exclusion is and ask them to confirm by email. Print out the emails and keep them in a safe place.
Marg

 

[Propagate]

Great idea Marg! Thanks.