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Peter Castleden @peter_castleden
, 19 tweets, 4 min read Read on Twitter
There's been a fair amount of twitter commentary over the #Momentum claim story, so here's a thread unpacking the various concepts a little.
1/ For background. It's reported that Momentum is declining to pay a sizeable death claim on a policy where the cause of death was murder. The claim is refuted because of non-disclosure of diabetes.
2/ Let's start with some basic workings of life insurance. The only time your health status matters is the point at which you are buying the cover. It is at this point that you need to be honest and forthright in your insurance application.
3/ If you health deteriorates after you have a policy, there is no need for you to inform your insurer, and any claims which result of this deterioration of health are completely valid...provided the information provided when the policy was bought was true and accurate
4/ This is one of the reasons insurers advocate buying cover while you are healthy, since it often becomes expensive, or impossible, to get cover after your health has taken a knock.
5/ At claim stage, Life Insurers do a check to see if there was non-disclosure at the point of sale. The thoroughness of this check usually depends on the size of the claim, and how old the policy is (the newer policies get checked more) since this is where most fraud is found
6/ The onus is on the Life Insurer to prove non-disclosure, meaning that if they can't prove it, the claim is valid. Suspicion alone is not enough to decline a claim. Usually the insurer also needs to be sure that the person insured was knowingly dishonest
7/ In other words, they should have reasonably been honest about disclosures at the point of purchase. To illustrate this point, let's assume a client has very high cholesterol when they buy the policy, but the client has no idea that they have this problem
8/ If this leads to a subsequent claim, the insurer cannot turn the claim down since the client themselves didn't even know they had the condition, so couldn't be expected to disclose it (duh!)
9/ This is why insurers will sometimes test for these kinds of things when a policy is taken out. It's because people often don't realise they have health problems which they may in fact have.
10/ Back to Momentum - without having all the facts, I can assume that they can both prove that the client had diabetes at the point of purchase, and that the client knew about it - hence the non disclosure.
11/ The debate about what this has to do with a claim which has nothing to do with the condition is more interesting. IF, Momentum would have not given this client ANY cover whatsoever, there is a basis to decline the claim in total
12/ After all, if they knew what they should have known, and in that case would have declined ALL cover, then there is a case to not pay any claim, regardless of the cause. The morality of this may be debatable, and different businesses will do different things.
13/ In the case of @indie_fin, when we can't cover someone with comprehensive cover (due to health concerns, for example), we offer these applicants accidental cover only. In this particular case, we could argue that the client would have qualified for accidental cover
14/ And for this particular claim, accidental cover would have been valid. We could then work out the status of the policy had it been accidental only, and paid on that basis. Not all insurers work like this though
15/ I don't think that Momentum are crooks though. I don't have their claims stats, but I would estimate that fewer than 1% of total claims they receive are not paid to non-disclosure
16/ These stories tend to paint a picture of an industry of sharks. I find this fairly disappointing, since we do provide an essential social good. When we behave in a way which erodes public trust we do everyone a disservice.
17/ In my experience the ombudsman is usually very balanced and fair in adjudicating these cases. If the ombudsman has ruled that Momentum's decision is fair and legal, it's likely that this is in fact the case.
18/ At the same time I have tremendous pity for the widow and family who are the victims in this case, despite their innocence in this entire process.
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