AFCA Superannuation Determination 793218 

Key Takeaways

This decision illustrates the approach taken by AFCA to a recent complaint involving allegations of misleading or deceptive conduct against an Insurer and Trustee in the context of group life insurance.

AFCA concluded that the Trustee and Insurer had not engaged in misleading or deceptive conduct in its communications with the Complainant regarding his default cover under a group life policy which was restricted to Limited Cover.

Brief Facts

After having previously been rejected by another Insurer and Fund for additional underwritten cover due to the disclosure of a number of medical conditions, the Complainant applied to the Trustee for default Death, TPD and IP cover under the Fund’s group cover. The Complainant provided his medical information to the Trustee and stated ‘I gather your underwriter will want to determine if they will insure me for … fixed death and TPD based on my medical history/conditions.’

The Trustee advised the Complainant that cover had been issued under the policy with fixed Death, TPD and IP insurance effective from 12 July 2019 and the Complainant was provided with a link to further details regarding his cover.

The Complainant then moved his superannuation account (and cover) from his previous Fund to this Fund.

The cover applied for and obtained by the Complainant with the Trustee was Default cover, and was restricted to ‘Limited Cover’ for the first two years. Under the terms of the relevant policy, this meant that the Complainant was not covered for claims arising from any pre-existing health conditions for two years from the date cover commenced.

Within the first two years of cover, the Complainant suffered a disability which arose from a pre-existing medical condition. He lodged a claim for IP benefits, which was declined on the basis of the Limited Cover provisions of the policy.

The Complainant alleged that he was unaware that his cover did not extend to claims arising from any pre-existing condition. He further claimed that the Trustee and Insurer should have been aware that when he applied for cover, he was in fact seeking full cover, including cover for any pre-existing medical conditions. This was because he had sent an email to the Trustee disclosing all of his medical conditions at the time he sought cover.

The Complainant argued that by failing to inform him that his cover was restricted to Limited Cover, the Trustee and the Insurer had misled him. He claimed he had suffered loss because he would have maintained his previous cover had he known that the new cover excluded claims arising from any pre-existing conditions.

The Complainant lodged a complaint with AFCA seeking payment of his benefits under the policy.

Determination 

AFCA found that the Trustee and the Insurer had not engaged in misleading or deceptive conduct, either through any of the communications sent to the Complainant or through the absence of communication.

AFCA concluded that the Trustee and Insurer could not reasonably have known that the Complainant was seeking full cover immediately, including cover for his pre-existing health conditions. The mere fact that the Complainant had disclosed these conditions at the time he applied for cover was not sufficient to establish that the Trustee or Insurer should have been aware of his claimed intentions with respect to full cover.

Relevantly, AFCA noted that at the time cover was accepted, the Complainant was provided with accurate information about his cover. This included a hyperlink with details about the Limited Cover provisions in the policy.

When considering the effect of the representations made to the Complainant regarding his cover, AFCA found that a reasonable Fund member who had considered the entirety of the communications with an open mind would not have been misled.

Based on the finding that the Trustee and Insurer could not have known that the Complainant wanted full cover immediately, AFCA was also satisfied that they did not mislead the Complainant by silence or deliberately keep him in the dark about the terms of his cover.  

Finally, whilst AFCA noted that the Trustee and Insurer did not specifically draw the Complainant’s attention to the Limited Cover provisions in the policy, it was satisfied that this was fair and reasonable in the circumstances.

Implications

AFCA has affirmed that in circumstances such as this, it remains incumbent on a Fund member and insured person to review and consider all the information provided to them via correspondence, including additional policy and coverage details provided through a hyperlink.

In order to avoid any allegation of misleading or deceptive conduct however, Insurers and Trustees must ensure that all relevant information regarding policy terms and coverage is provided to insured members and is clearly expressed, accurate and easily accessible.