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.

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.

Published:Friday, 1st Nov 2024
Author: Paige Estritori

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.

Share this news item:

Insurance News

Clear

New Crane Cover Highlights the Insurance Gap for High-Risk Trades

24 Jun 2026: Paige Estritori

A new specialist insurance product for Australian crane and rigging operators is a timely reminder that not every business fits neatly into a standard policy box. ARTes Specialty, working with wholesale provider Mobius Insurance, has launched an integrated crane and rigging policy for the local market, adding to its earlier Australian offerings for commercial loggers and contractors’ plant and equipment. - read more

NSW Budget Puts Insurance Levy Pressure Back on the Table

24 Jun 2026: Paige Estritori

The latest NSW Budget has reignited debate over the Emergency Services Levy, with insurance industry concern growing that escalating collection forecasts are strengthening the case for reform. For households and businesses already managing higher premiums, the issue is more than a line item in the state accounts. It goes directly to affordability, underinsurance and whether the cost of funding emergency services is being shared fairly. - read more

NSW Insurance Levy Pressure Adds to Salon Cost Concerns

24 Jun 2026: Paige Estritori

The NSW Budget released on 23 June 2026 has put insurance affordability back in the spotlight, with updated forecasts showing emergency services levy collections are expected to be materially higher than previously projected. For beauty salon owners, skin clinics, nail technicians and mobile beauticians in NSW, the issue is not just a government finance story. - read more

Life Insurance Demand Strengthens as Businesses Reassess Protection Needs

24 Jun 2026: Paige Estritori

New market data reported by Plan For Life points to a notable rebound in parts of Australia’s life insurance sector, with individual lump sum insurance new business rising 6.7% across the 2025 calendar year and individual income protection new business increasing 8.3%. While overall risk new business was lower, that decline was attributed largely to group risk sales returning to more normal levels after earlier periods of heightened activity. - read more

New Report Highlights the Cost of Unplanned Business Succession

24 Jun 2026: Paige Estritori

A new Business Health research report has put a sharp focus on a familiar but often under-managed risk: what happens to a business if its principal suddenly dies or becomes permanently disabled. While the report is centred on Australian financial advice practices, its message applies broadly to SMEs, partnerships and owner-led companies where enterprise value is closely tied to one or two key people. - read more

Click for more Insurance News