A New Zealand couple living in Perth have taken ANZ to court for selling them life insurance which excludes payouts to Kiwis who are not citizens. Mr Cairns took the issue up with ANZ after an adviser discovered a clause in his policy document barring them from any payout because they were not citizens or permanent residents. Mr Cairns has had all the premiums refunded, and ANZ has changed the terms of policies as a result of the discovery. Cover for New Zealanders is being resrospectively added to contracts. However, Mr Cairns had a stroke during the policy and can now no longer obtain cover. Although offered another policy by OnePath he states that this would have required him to remain silent on the issue. Clearly it has not become a point of principle for him. Read more here.
There are wider considerations.
One is that although premiums have been refunded it is not merely premiums that are at stake. Remember: insurance is not merely about the premium and the claim payment. It is about the peace of mind that comes from knowing financial risk has been transferred. Client's want that, and when they discover that they perhaps never had it, they can become very, very unhappy about it. Insurance clients have to trust their insurers. That was always the part of the bargain of 'utmost good faith.'
The other is that consumers cannot be expected to be insurance lawyers. In this case an insurance-specialist financial adviser noticed the clause which would have denied them payment. It pays in almost any matter where you are non-expert to ask for advice and take it. That advice could even come from an in-house specialist.