John (a pseudonym) came to us in October 2024 after his insurer made allegations that he had fraudulently failed to disclose certain medical conditions during his application for disability insurance cover back in 2012. John was seeking a payout on multiple insurance policies, including for terminal illness, TPD, income protection and trauma insurance.
Duty of disclosure
Sometimes when you claim under a disability insurance policy, for example:
- TPD insurance;
- income protection insurance;
- trauma insurance; or
- terminal illness and life insurance,
an insurer may refuse your claim due to alleged non-disclosure.
This means that when you applied for your insurance cover, there were matters which the insurer believes you didn’t tell them when you applied for the insurance cover and, therefore, that you breached your duty of disclosure.
Disputes with non-disclosure are legally very complex, and you shouldn’t just accept that what an insurer says is correct. It often isn’t, and you should seek legal advice about your rights and entitlements.
You can read more detail about disclosure obligations in our earlier blog, “Duty of disclosure in injury and illness insurance policies”.
Insurer threatens to deny John’s claim
When John came to us for help with his disability insurance claims, his specialists had given him less than 12 months to live. He had already lodged his claims under his various policies.
After approximately one year of John providing information in support of his claim, the insurer had threatened to decline it due to alleged medical non-disclosure issues. This was extremely worrying for John and his family, particularly given his terminal illness. He made a decision to seek legal assistance, contacting us in October 2024.
Insurer sends a "procedural fairness" letter
It has become standard practice for insurance companies to send a procedural fairness letter prior to rejecting a claim. Unfortunately, many people who receive these letters believe that the insurer has their best interests at heart – simply by virtue of the name of the document/letter. This is not necessarily the case.
Procedural fairness letters generally:
- say that the insurer is proposing to reject your claim;
- outline the material that they are relying on to reject the claim;
- give you an opportunity to respond to the reason for rejection; and
- give you an opportunity to gather more information to support your claim.
You can read more about these documents in our earlier blog, “TPD claims and procedural fairness letters”.
We provided a detailed response to the insurer’s procedural fairness letter explaining why the insurer was not entitled to cancel our client’s disability insurance policies and decline his claim.
As part of our response, we explained why the insurer was wrong to conclude that many of the minor medical conditions referenced in their letter were not matters that a reasonable person would consider relevant to disclose.
Despite our submissions, the insurer refused to accept our client’s claim.
Proceedings issued in the Victorian County Court
Because the insurer did not respond to our demand for an urgent decision to pay our client’s claims, we filed proceedings in the County Court seeking a payout of the insurance benefits.
Court is usually a lengthy process that can take more than 12 months to reach a trial. However, there are some circumstances where parties can request a faster hearing. In this case, we successfully made a formal application for an expedited trial date, given John’s terminal illness.
Following mediation in December 2024, the proceeding was resolved without the need to go to trial. Mediation is a process where an impartial third-party mediator helps individuals or groups resolve disputes. It is aimed at identifying the issues in dispute, facilitating communication, and reaching a mutually acceptable agreement without the need for a trial.
$3.5 million dollars secured for our client
The insurer paid John a settlement of $3.5 million, which he received just before Christmas (2024). This settlement meant that John was able to focus on spending time with his family in the knowledge that their financial future was more secure. All in all, it took just over two months from the time John contacted us to secure this outcome for him and his family.
Court is a stressful process which most people sensibly want to avoid. However, it is sometimes a necessary step if an insurer is refusing to pay what we believe to be a legitimate claim.
With higher value claims in particular, we have recently seen a trend toward insurers adopting a more adversarial approach to their assessment. That is, insurers are often adopting a defensive stance when handling claims, often challenging the validity of claims, scrutinising evidence more rigorously, and resisting payouts. This approach can make it more difficult for claimants to receive the insurance benefits they’re entitled to and may lead to prolonged disputes or denials of claims.
Get help from a disability insurance lawyer
If, like in John’s case, your insurer is refusing to pay your claim or has made allegations that you failed to disclose medical conditions when applying for your policy, you should speak with a lawyer as soon as possible.
At Berrill & Watson, it costs you nothing to get some preliminary advice and we run claims on a “no win, no fee basis”.
Contacting Berrill & Watson
📞 Melbourne: 03 9448 8048
📞 Brisbane: 07 3013 4300
📞 Anywhere else in Australia: 03 9448 8048
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We are Australia's best-value superannuation/insurance law firm. Other law firms charge nearly double (& sometimes more than double) what we charge. So, if you get a quote from them, or have a cost agreement, ask us what we will charge you.
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