AFCA Upholds Fair Evaluation in Insurance Claim Dispute
AFCA Upholds Fair Evaluation in Insurance Claim Dispute
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
The Australian Financial Complaints Authority (AFCA) has directed MetLife to re-evaluate a policyholder’s income protection claim, focusing on justified interpretations of mental health exclusions.
In a case brought to attention, the claimant, who secured his coverage via superannuation, applied for a $9300 monthly policy intended for a two-year coverage span back in March 2020.
The claimant's struggle began in August 2019 when his general practitioner declared him medically unfit for work due to "significant psychological distress," primarily catalyzed by workplace bullying.
As a recourse, the individual took personal leave in August followed by paternity leave in October of the same year. Although he resumed work in October 2020, he had to suspend his professional engagements again by December.
In September 2021, the claimant submitted a request for income protection benefits, citing an adjustment disorder diagnosed with mixed anxiety and depression as the reason inhibiting his capacity to work.
However, MetLife rejected the claim in July 2022, accusing the claimant of inaccurately representing his medical history. The insurance provider argued that the applicant falsely stated he hadn’t been “diagnosed with or sought medical advice or treatment” for psychological issues at the time of application.
MetLife asserted that the applicant already exhibited psychological distress, hindering his work capability long-term, and had they known, the policy would not have been issued. They determined his stress related symptoms equated “to a psychological condition.”
The claimant countered, maintaining he neither identified with a history of psychological ailments during his application process, nor would a typical person in his context.
AFCA elaborated, saying although the complainant experienced "significant stress in 2019," ordinary perception does not always align stress with a psychological or clinical mental health condition. The inquiry focused on awareness of any conditions at the time, not diagnosis existence.
AFCA highlighted that the treating GP did not insist on mental health assessments commonly expected when symptoms emerge, and the sole "treatment" employed was voluntarily steering clear of the work environment, a decision lacking a formal diagnosis.
They elucidated that “Even if the answers given were not actually true (because with the benefit of hindsight the complainant was in fact suffering from a psychological or mental health condition), the panel accepted a reasonable person in the circumstances would also have reached the same belief as the complainant did.”
Following the conclusion, AFCA mandates MetLife to process and revisit the claimant’s submission and communicate the outcome to Hostplus, the coverage trustee, within a 60-day frame. The original content was reported by the Australian Financial Review.
Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.
Suncorp, a leading Australian insurer, has recently secured a substantial reinsurance agreement valued at AU$2.4 billion over a five-year period. This strategic move is designed to bolster the company's financial resilience and stability in the face of increasing natural hazard costs and a competitive insurance market. - read more
The Australian Prudential Regulation Authority (APRA) has recently imposed an additional AU$2 million capital requirement on Sovereign Insurance Australia (SIA). This decision comes in response to identified deficiencies in SIA's risk management framework and operational risk management practices. - read more
In a significant development for Australia's construction industry, Mecon, a specialist in construction insurance, has announced an increase in its underwriting capacity. Effective from March 10, 2026, Mecon now offers coverage up to $120 million for single projects under its material damage and public liability policy sections. This marks a substantial rise from the previous limit of $50 million. - read more
Mirabelle Underwriting, a specialist in construction and engineering insurance, has launched a new product tailored for renewable energy operations in Australia. This initiative, backed by Lloyd's capacity, aims to address the specific risks associated with the rapidly expanding renewable energy sector. - read more
The Australian Securities and Investments Commission (ASIC) has commenced Federal Court proceedings against the Royal Automobile Club of Queensland (RACQ), alleging that the insurer disseminated more than 500,000 misleading insurance renewal notices to its customers. This action underscores the regulator's commitment to ensuring transparency and fairness within the insurance sector. - read more
Estate planning is a critical process that often goes overlooked, but it's essential for securing the financial future of your loved ones and ensuring your assets are distributed according to your wishes. It involves the careful organization and protection of an individual’s estate to minimize uncertainties and facilitate the smooth transfer of assets after their passing. While it may seem complex, understanding the basics of estate planning is necessary for every Australian adult, regardless of wealth. - read more
Financial security is one of the most important aspects of modern family life. Ensuring that loved ones are protected and well-supported in the event of an untimely death is a fundamental concern for many Australians. - read more
Trauma insurance, also known as critical illness insurance, is a type of coverage that provides a lump sum payment in the event that the insured suffers from a critical illness or injury. Unlike health insurance, which covers medical expenses, trauma insurance is designed to provide financial protection by helping to cover the additional costs associated with recovery from a severe illness or injury. - read more
Financial security for families is an essential consideration in any household. Life can be unpredictable, and ensuring that your loved ones are protected from financial hardship in your absence is a critical part of financial planning. - read more
When it comes to financial planning, life insurance often takes a backseat. Many married couples in Australia overlook its importance, thinking that it's not immediately necessary or that they can simply put it off for later. However, life insurance should be regarded as a cornerstone of a solid financial strategy. - read more
Knowledgebase
Disability Insurance: A type of insurance protection that pays a portion of a person's income lost due to a total or partial disablement arising from either an accident or a sickness.
No comments yet. Be the first to share your thoughts.