Take Life Back
Consultation open: Insurance Contract Law Review

Fair Go on life insurance non-disclosure

Fair Go has this item on insurance non-disclosure, with a client of Partners Life who had a claim declined. Link.

As always, in a few minutes on TV, it is hard to say exactly what happened. The details not supplied by the client and the actual doctors notes are not available to us. Not knowing the detail means that I will not comment on this case, but can only consider cases like this one I have seen elsewhere.

Insurers pay valid claims, and do so with constant regularity. In cases like this one, where I have seen the information, I have seen both situations where it is obvious that an honest mistake was made and there is no way the client would have though that any of the four issues identified was worth disclosing - even though the form, I am sure, says that everything should be disclosed. It is even possible that a paternalistic doctor did not disclose their concerns about the client's health to the client. That happens, and leaves the client in a tough place. I have also seen cases where the client was worried about their health, perhaps more worried because of concerns raised several times by the doctor, and was therefore much more motivated to buy insurance, and specifically, in spite of being asked, did not raise these issues.

But for me, the lesson of this case is not about guessing which of either of those hypothetical scenarios applies.

It isn't even about insurance law reform, which might help a bit (with clarity, with clearer boundaries on the duty of disclosure) but then again - it might not help, and even in markets with insurance laws like those being considered still have non-disclosure problems and related claim declines. That law reform is still valuable, and needs to be done. But that is not the main lesson.

The real lesson is the underwriting process used. The limits of the process, which I call the "thirty year memory test," are clearly exposed at this point. I think it will be with us for a while, but it probably isn't going to be, in the future, the default way to apply.

Moving to new underwriting approaches, which use shorter forms, but more data; which rely on measurement, rather than questions and answers; which can use big data to assess cases rather than relying too much on the client's own, flawed, knowledge of their health.

There are some signs that this can be done. AMP's KiwiSaver Essentials is a good example of a product which crushes the problem neatly. Other technological approaches - such as evaluating images, or directly accessing medical records - are also worth exploring.


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I'll admit to being surprised that this story made it to air, as prima facie, this was a clear case of non-disclosure and I understood the Ombudsman agreed. (BTW - Where was the Adviser in this?)

Your point, Russell, of how to overcome the '30-year memory test' in more genuine cases, is the more salient one, but one that the industry may always grapple with.

J-P Hale

Good comments Russell.

The salient point on this article is the none disclosure of the sleep apnea. The client knew it, uses a prosthetic every day and didn't disclose it. In his own words it was a managed condition and didn't feel that it was relevant.

That's the core of this issue. Disclosure and deciding what the insurer should know after specifically asking, results in this situation.

When I say core to the issue, when it comes to income protection and sleep apnea at underwriting, every insurer in New Zealand will decline cover.

The rest, was fluff...


I note on the Fair Go article the "Guinea Pigs" had no adviser assisting and this is why they would have found it difficult. It wasn't stated that almost all occasions an adviser would assist a client to complete an application to ensure all detail is captured. I agree with Mike, when i saw the article i wondered where the adviser was in the process. That is the application and the claim.

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