“Non-disclosure” in life insurance… PART II

In July we commented on a very public story relating to an insurer voiding a policy for non-disclosure.  We commented on the story based on information that was available to the public - that’s all the information we had available to us at that time.

Our view then was that the insured person did not disclose certain facts and the insurer was within its rights to void the policy.

In case you missed it, read our previous story PART I here.

The story is especially tragic because the insured person, Wayne Croft, has contracted cancer, is now terminally ill and is in serious financial difficulty. We suggested then that Wayne had only himself to blame for the predicament he is in.

Well now we’re thinking… not so!

In the past few days we’ve been sent some unsolicited details about this case suggesting we may owe Wayne an apology for our earlier comments. And given the tragic circumstances, we feel it’s necessary to add balance to our previous comments.  We now think Wayne’s the victim in this ugly mess.

You see, here’s the thing.

When an insurer offers you a policy, they do so with the information you provide them.  If you hide details about your health when you apply, they have the right to void your policy if they catch you out later on. That’s how it works.

But…

What if the health information you provide to the insurance company is so grossly inadequate they’re in no position based on this information to underwrite your application and make you an offer? What if you say on your application that you have a health problem but don’t give details? What if the insurance company simply ignores these red flags and the inadequate information and offers you a policy anyway?

Now the shoe is on the other foot… isn’t it?

The insurer has made you an offer based on information it knows to be grossly insufficient for the underwriter to do their job.  You accept the offer in good faith.  Has the insurer got the right to void the policy?

Not in our view.

We think this story is far from over.  And we’d like to see a happier endingJ

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5 Comments

  1. Jules Croft said,

    September 6, 2009 @ 5:59 pm

    Everyone has a story to tell and sometimes things dont always come out quite how you would like them too or perhaps its because we are govened by rules and regulations that do not permit the real events to be told . But then there are people out there that will stop at nothing to get the real story across. I met a man the other day … a perfect stranger with a heart of gold, a man who cares about another man that has a story to tell. He has given me the strength and determination to proceed with a fight that I am now sure I can win. Sadly it is a fight that my husband and I should not have to endure. We believed in a company that made promises that they have now chosen NOT to keep. Last week I had the chance to meet with two representatives from Sovereign Insurance and I saw first hand that I am a number and not a person. The perfect stranger who happens to have more than 20 years of knowledge in the insurance industry also came to that meeting and sat in front of two condescending men that insulted his intelligence. After that meeting I am now more determined than ever to make sure that the truth comes out. The man with the heart of gold is no longer a stranger but a friend for life, he knows we are not a number and has the commitment and generosity to help us. We cannot thank you enough DRC and let the battle begin!!! Jules Croft

  2. DRC said,

    September 8, 2009 @ 11:04 am

    Thank goodness for people like Ed who can take back what he wrote.

    Will Sovereign do a complete turn???

    I believe they will as they made a total Underwriting Error or in other words an Error and Omission in my opinion, which is an insurance companies worst nightmare.

    So now it is up to Jon Raby and Bryce Davies to answer the questions put to them by me yesterday.

    Now how many of you Sovereign supporters now have got something to say??

  3. linnie gibson said,

    September 8, 2009 @ 7:34 pm

    my bank manager advised me to take out a life insurance policy, after reading this and watching it on campbell live there is no way i will be going with sovereign.
    SHAME ON YOU SOVEREIGN. since when has the responsibility been on the customer to write up disclosures. surely this is the job of the broker or insurance company.
    you can’t take someones money and then not insure them….
    insurance companies spend millions of dollars a year on advertising to pull people in
    lets face it there are plenty of insurance companies to choose from.
    in one unfair foul swoop Sovereign has managed to aliate people all across the country.
    i hope that this man finds peace and quality time to be with his wife and family before cancer takes his life.
    god bless you all.
    SHAME ON YOU SOVEREIGN…….

  4. Sue Smith said,

    October 14, 2009 @ 4:30 pm

    Hmmmm – very interesting.

    What was the important bit of info the insurance company overlooked?

  5. Darcy Sollitt said,

    October 14, 2009 @ 6:09 pm

    There are a number of issues here where information was overlooked.

    Sovereign are saying this case was “Clean Skin” when actually this was not and further information was required before they accepted this application.

    In an application form when applying for insurance you are asked wether or not you are a smoker. Neither box Yes or No was ticked. Therefore Sovereign issued a policy based on what the broker had provided on a quote saying the client was a non smoker.

    There is also this question:

    Are you currently experiencing any health problems or are you
    seeking medical advice, counselling, tests, treatment or operation
    from a health professional?

    Mr Croft ticked Yes.

    This was followed by another question:

    Have you had any medical examinations by a doctor or specialist,
    tests or x-rays in the last five years?

    Mr Croft ticked Yes again.

    Now was information disclosed or not and did Sovereign choose to ignore these facts???

    Based on our expertise and research gathered from a number of insurance companies, Prudent Underwriters here in New Zealand, there is no way this application would have been accepted by any these insurers. Even a sleeping underwriter should have picked this up BUT Sovereign are saying this is a “Clean Skin”.

    What this means now is that Sovereign are saying NON-DISCLOSURE. Our questions to Sovereign was “What about what was disclosed but not acted upon by their Prudent Underwriter?”

    In a nutshell Sovereign are saying No Claim and they will fight this plus they are saying this is a “Clean Skin.”

    What this now means if Sovereign get away with it, is that every application that Sovereign has received wether from a Broker, ASB Bank or direct from any source, that Sovereign will not act on what was disclosed BUT was is not disclosed.

    This case has huge implications on every insurance policy that Sovereign have on their books.

    My question to any person who has a policy with Sovereign is “Will you be paid out at claim time?”

    Maybe every policy holder that Sovereign have on their books needs to reapply to another company like Pinnacle to see if their policy will be paid at claim time.

    What about all the other claims that Sovereign have declined that fit into this category. This is frightening isn’t it????

    Maybe this should go to the Government as it does effect every New Zealander to see what they say about this.

    Scary isn’t it?????????

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