IN THIS ISSUE

Claims

When buying a risk policy an insurer’s claim philosophy is as important as the premium and the benefits to a prospective policyholder. In order to assess its approach to paying claims it would therefore be relevant to look at the insurer’s claims ratio (i.e. the percentage of claims paid to claims submitted).

Not all insurers have the same claims practices. This was demonstrated at 2 claims workshops that were held for insurers during this year. At the workshops our office worked through 4 case studies with the staff of various insurers. It was noticeable that different insurers approached the cases differently. The example cases were chosen by our office because they were not clear cut or easy cases. Participants were provided with all the documents necessary to assess the claims. By working through the cases our office illustrated its approach to cases of this nature. These types of workshops and the publication of cases on our website hopefully lead to a more uniform approach within the different insurers’ claims assessment teams.

The fact that some insurers apply a strict approach to claims assessment and others a more generous approach, means that the same case could have a different outcome depending on the insurer involved. Intermediaries would generally have experienced this difference in approach when assisting claimants in submitting claims. They should be able to advise their clients on this aspect. A lower premium should not be the only criteria for choosing a policy.

The following are summaries of 2 case studies that were part of the workshop and elicited differing outcomes from the participants.

Case 1

The complainant, Mrs M, took out an insurance policy in 2001. In 2004 she was diagnosed with breast cancer. A mastectomy was performed and she submitted a claim under her policy. Cancer is defined in her policy as follows: "The manifestation of a malignant tumour, characterized by the uncontrolled growth and spread of malignant cells and the invasion of normal tissue, and which requires major surgery and/or chemotherapy and/or radiotherapy."

The insurer took the view that “the crux of the matter is that the breast cancer was in situ, had not spread and was not characterized by the uncontrolled growth of malignant cells and the invasion of tissue.” Based on this view, the insurer declined the claim.

The complainant then applied for more life cover and terms were offered at substantially higher rates, as "there is a history of illness, namely breast cancer ... The client has been placed in a high-risk category and will be loaded accordingly."

The complainant referred the matter to our office for assistance, as she was unhappy with the conclusion that her condition did not qualify her for the dread disease benefit but that life cover would only be offered to her at substantially higher premium rates.

We referred the matter to an independent medical consultant for an opinion and he stated the following in his report:

"I would therefore not contradict the insurer's rejection of the claim, as the contractual criteria defining cancer have not been fulfilled. However, this case is somewhat unusual, in that the extent of cancerous ductal cellular change was scattered and widely spaced, and that in addition, a second focus of lobular carcinoma in-situ, with a worse prognosis was found, causing the surgeon to proceed to a mastectomy operation. Possibly also worthy of consideration, is Mrs M’s allegation that she had been offered four-fold premium-loading by [the insurer] at her recent application for more life cover. This would support her impression that the insurer, while trivializing her claim for cancer, considers the event to be of major prognostic significance when offering further insurance."

A copy of the report was provided to the insurer.

The insurer made an offer of 50% of the dread disease benefit to the complainant, which she duly accepted.

Case 2

The complainant was an electrical training officer who stopped working due to ill health after December 2003 and was subsequently retrenched. His duties involved training and development of electrical apprentices and learner technicians. 70% of his day was spent actively training students, supervising them to ensure safety, and demonstrating equipment, and 25% of his day was spent doing administration. His work therefore involved working and interacting with people as their teacher most of the time.

In March 2002 the complainant was diagnosed with ulcerative colitis and although he was treated with medication for a period of nine months, there was no improvement. He underwent a total procto-colectomy in January 2003 and a closure ileostomy in April 2003, after which he suffered “smouldering inflammation in the rectal remnant”. Some consequences of his symptoms were extreme discomfort and excessive bowel movements resulting in his taking excessive sick leave and being unable to do his job properly. His condition also had implications for his activities of daily living as he always had to be close to a toilet. His employer made efforts to accommodate him, in line with the recommendations of the Labour Relations Act Code of Good Practice, by allocating an additional trainer, when necessary, to assist in the training activities. The employer also permitted him to go home when he did not feel well. However the employer’s view was that his condition appeared to be deteriorating, and there was no suitable alternative work they could offer him that would fit in with his medical condition. A report from the complainant’s attending doctor confirmed the complainant’s statements regarding his limitations, and stated that the disability was of a permanent nature. His further conclusion was that the condition severely handicapped the complainant from performing his duties as a training officer.

A specialist physician who examined the complainant in March 2004 confirmed the condition of the complainant but concluded that “there is no objective evidence on which to base the conclusion that he is permanently and totally disabled”.

When the complainant claimed the disability benefit under his policy, the insurer relied on the specialist’s statement and interpreted it to mean that the complainant was not disabled for his job. The claim was declined, and the complainant approached our office for assistance.

Disablement was defined in the policy as

"a state of ill health or incapacity due to the member’s injury or illness which results in the member suffering a reduction in earnings and being unable to carry on his/her job or other job for a period of twelve months from commencement of the disablement, and after the end of the aforementioned twelve month period, any job."

Further definitions applicable were the following:

"Job": "the job that the employee normally carried on with the employer immediately before his/her disability started."

"Other job": "any other job with the employer for which an employee is reasonably suited taking into account his/her standard of education, training, experience, ability and the bona fide efforts of the employer to comply with the Labour Relations Act No. 66 of 1995."

The insurer had concluded that, in the light of all the medical information received and particularly that of the specialist physician, the complainant was still capable of performing his own occupation, namely that of electrical training officer.

We took the view that the specialist physician's conclusion was not based on any assessment of whether the complainant could, in terms of the definition of disablement in the policy, perform his “job” or “other job” or “any job” as defined. The specialist physician’s report essentially outlined the extent of the complainant’s medical impairment. We suggested to the insurer that it was not correct to assume that the specialist physician had concluded that the complainant was not disabled for his job. The assessment of disability is a legal process rather than a medical one. An assessment of disability must be made taking into account the medical evidence of impairment, as well as the evidence regarding the influence of the impairment on the complainant’s ability to perform an occupation in accordance with the particular requirements of the policy definition of disablement.

The evidence as presented by the complainant, his employer and his treating physician had all indicated that the complainant was unable to perform his “job” or “other job”. The complainant was clearly limited in performing his work as a training officer, which required constant interaction with the students, by his pain and his constant need to use the toilet which caused both stress and embarrassment.

Although his employer had attempted to accommodate him for some time, the arrangements had not been satisfactory for either the complainant or the employer. It appeared to us that the limitations imposed on the complainant by his illness would also preclude him from performing any “other job” or “any job” as defined; the complainant’s education, training, experience, and ability were geared towards the occupation of teaching and interacting with others and it would not be reasonable to expect him to perform a job that did not include these components, for which he was trained and experienced.

We therefore recommended to the insurer that the weight of evidence in the case seemed to indicate that the complainant was indeed disabled from working in his own or a similar occupation.

The insurer was at first reluctant to accept our recommendation and arranged for the complainant to be examined by a gastroenterologist. Following this examination, and discussions between the insurer’s Chief Medical Officer, the gastroenterologist and the complainant’s attending doctor, the insurer decided to admit the claim.