Key Takeaways

This Determination is a reminder of the importance of ensuring that contractual terms are properly defined in a policy. Where a term is not properly defined, AFCA may interpret the clause in accordance with its ordinary meaning, which may differ to the intended meaning. Where an insurer or trustee rely on publically available material in support of a decision, they should ensure the evidence is from a reliable source and will withstand scrutiny.

Brief Facts 

The dispute concerned a claim for a benefit following the death of a young woman (the Deceased) who departed Australia in December 2013 under the guise of travelling to Denmark for humanitarian work but instead travelled to Syria. According to extensive media reports, the Deceased travelled to Aleppo Syria to actively fight (alongside her husband) in support of Al Qaeda. On 9 January 2014, the Deceased and her husband were killed in Syria and their bodies were never recovered.  

The insurer and trustee declined the claim for the death benefit on the grounds that:

1. The Deceased died while working overseas in a Hazardous Destination (clause 4.10); and/or
2. The death was a result of the Deceased participating in 'Militant Activities' (clause 8.6).

Policy Terms

In support of its decision, the insurer relied on clause 4.10 of the Policy which stated:

4.10 COVER DURING OVERSEAS RESIDENCE
Cover may continue for an Insured Person working overseas provided that
[…]
(c) at the time of the Insured Person’s departure, the country of residence is not considered a
Hazardous Destination.

In relation to the 'Militant Activities' exclusion, the Policy relevantly stated:

8.6 Exclusions
No benefit is payable under The Policy where the death or Total and Permanent Disablement is the result of the Insured Person participating in Militant Activities.

Determination

AFCA considered that cl 4.10 of the Policy had no application to the complaint as the insurer had not demonstrated that cover had ceased in the first instance under clause 8 of the Policy (covering cessation of cover).

In the circumstances, cover not having ceased in the first place, cl 4.10 which had the effect of continuing cover except for in ‘Hazardous Destinations' (which Syria in 2014 clearly was) had no application.

It was accepted that the term ‘Militant Activities’ in cl 8.6 was not defined in the Policy. In the absence of a defined term, AFCA had regard to the Macquarie Dictionary meaning of ‘militant’ as including ‘engaged in warfare… someone engaged in warfare or strife… a militant person’.  

AFCA considered the purpose of the Militant Activities exclusion clause was clear in that it intended to exclude cover for insured members engaged in warfare or combative activities. That is, the Policy was intended to cover death arising in the normal course of life ‘rather than through insured persons putting themselves in harm’s way’.

In support of the decisions to decline the claim based on the Militant Activities exclusion clause, the insurer and trustee referred to several newspaper articles relating to the Deceased, including interviews with her father regarding the circumstances of the Deceased’s travel and her death. In particular, AFCA had close regard to a Daily Telegraph interview with the Australian Federal Police’s (AFP) counter terrorism manager in which the AFP alleged the Deceased was actively fighting with her husband in Syria at the time of her death.

The Deceased was mentioned by name by the AFP as being a female fighter that had lost her life in the war zone. AFCA considered the AFP’s counter terrorism manager had special knowledge of the facts surrounding the Deceased’s travel and death in Syria. The complainant was unable to provide compelling evidence to demonstrate the Deceased travelled to Syria for humanitarian reasons or that she was not involved in the alleged terrorist activities.

The complainant argued the insurer and trustee were required to show the exclusion clause had been satisfied to the Briginshaw standard (i.e. the test applicable to fraud) due to the serious allegation that the Deceased was fighting for a terrorist organisation and participating in militant activities. AFCA declined to adopt this test and stated:

AFCA is not bound by the rules of evidence, however, so for the purposes of determining this complaint the panel considered whether the available evidence supported the insurer’s and trustee’s decisions on the balance of probabilities.

Based on the extent of the media coverage, in particular the AFP interview, AFCA was satisfied that the decisions of the insurer and trustee to apply the Militant Activities exclusion were made fairly and reasonably in the circumstances and resolved to affirm the decisions.

Implications

The concept of excluding life cover for those engaging in war or war like activity is as old as insurance itself and through the years, various fine lines have been drawn by courts and tribunals as they seek to discern meaning from policy terms dealing with this issue. Here the insurer chose to let its clear words ‘Militant Activities’ speak for themselves (rather than define them) which was definitely a bold choice. Generally speaking, as we move far away from concepts of traditionally defined military conflicts, insurers should give careful thought to the activities they wish to exclude and define such activities with precision, either with the words they use (as the insurer did here) or in the attached definitions.

Absent precision, and as we have seen with the recent business interruption case on the pandemic exclusion in a general insurance policy¹, the courts will not be concerned with the intentions of the parties on such matters if the clear words of the policy do not match such intentions.

Finally, in relation to the ‘standard of proof’ required when alleging serious misconduct by an insured, while AFCA declined to apply the standard required in fraud cases, the evidence must nevertheless be from a reliable source and unequivocally support the insurer’s and trustee’s decision.

¹HDI Global Specialty SE v Wonkana No. 3 Pty Ltd (NSWCA 2020)