Insurance Company Denied ….I think they are Acting Unfairly but Where Do I get Help?
The Australian Financial Complaints Authority (AFCA) was established to provide a quick and accessible dispute resolution process when an insurance company denies a claim. This article focuses not on workers compensation or motor vehicle third-party (Greenslip) insurance, but on income protection and total and permanent disability (TPD) cover—often arranged through a superannuation trustee.
A recent AFCA decision illustrates how the tribunal can protect consumers from arbitrary claim denials. Here’s what happened:
Joe (not his real name), a self-employed worker, took out income protection insurance to safeguard against loss of income due to injury. In 2013, an injury ended Joe’s working life, and he lodged a claim under the policy. The insurer accepted the claim and began paying a monthly benefit.
Ten years later, Joe alleged that the insurer had miscalculated his benefit and that he had been underpaid. The insurer acknowledged a miscalculation but claimed they had overpaid Joe and intended to reduce future payments to recover the excess.
The dispute was referred to AFCA, which found:
- The insurer acted unfairly by attempting to reduce payments a decade after the original claim, especially given that Joe could not reasonably be expected to retain business records for that long.
- Likewise, Joe could not pursue a recalculation after such a long delay for the same evidentiary reasons.
- The insurer was ordered to reinstate the original monthly payments and pay Joe $2,500 for the distress caused by the threat to reduce his benefit.
This decision highlights AFCA’s commitment to fairness and justice. While AFCA cannot make decisions outside the terms of a policy, it ensures those terms are applied equitably.
AFCA also offers dispute resolution options that may not be available in court, where strict legal principles apply.
We encourage insureds who feel they have been treated unfairly by their insurer to seek advice before accepting the company’s decision. If we recommend an AFCA application, we can assist in preparing persuasive submissions supported by strong evidence and aligned with AFCA’s decision-making principles.
To discuss your situation, contact Emily in our Client Relations Office and request a conference with Lauren Rowland, Partner in charge of Insurance & TPD disputes.
See the full ruling here.
