Mary (a pseudonym) came to us in 2019 seeking assistance with a trauma insurance claim. She told us that her multiple sclerosis meant that she had to cease work as a school teacher. Mary explained that leading up to her cessation of work, she had been really struggling with both the physical and psychological symptoms of her disease, and by the end of 2018, it had all become too much for her to continue working.
Mary lodged a trauma insurance claim after ceasing work
Mary confirmed that she held health events cover for trauma with her insurer. The insured amount ranged from a Category A benefit (the highest benefit payable) to a Category E benefit (the lowest benefit payable). Generally, with this type of insurance cover, the greater the extent of the insured member’s disability, the greater the benefit payable.
When Mary lodged her trauma claim by herself, the insurer did approve her claim but only paid her the Category E benefit attached to her policy in the amount of $10,000.
Why did the insurer pay the lowest benefit available under the trauma insurance policy?
The category of benefit payable to Mary was dependent on her ability to perform Activities of Daily Living (ADLs). Generally, ADLs refer to activities that are used to measure a person’s functional status.
In Mary’s circumstances, this included:
- self-care;
- physical activities;
- sensory function;
- hand function;
- communication; and
- advanced functions.
It was the insurer’s initial view that because Mary’s multiple sclerosis was relapsing-remitting*, Mary was still able to complete at least five of her six ADLs and therefore, Mary was only entitled to the Category E benefit of $10,000.
* Relapsing-remitting multiple sclerosis is a type of MS where symptoms flare up (relapse) and then improve or disappear (remit) before potentially returning later.
Our complaint to the insurer
After Mary had engaged our services, we made several submissions to the insurer, outlining why their decision to pay the lowest category of her trauma insurance benefit was incorrect.
We made it clear to the insurer that Mary’s condition was chronic, permanent, incurable and degenerative, noting that it was highly unlikely that Mary’s condition would improve.
We further highlighted that Mary’s relapsing-remitting multiple sclerosis can mean her regular relapses last anywhere between a few days to a few months, undeniably impacting on her ability to perform the required ADLs.
In response to our complaint, the insurer approved Mary’s claim under a Category B benefit in the amount of $170,000 because, in their view, we had shown that Mary was unable to perform at least three out of her six ADLs.
While Mary was very happy with this initial outcome, it was our view that the medical evidence supported that Mary was unable to perform at least four out of her six ADLs and therefore, Mary should be paid the Category A benefit of $250,000.
So, after Mary had been paid her Category B benefit, we progressed her complaint to the Australian Financial Complaints Authority (AFCA).
Further success at the AFCA
The AFCA is a free and independent dispute resolution scheme that hears complaints about financial products and services. Any determination that is made by the AFCA is binding on an insurer.
We lodged our complaint at the AFCA on the grounds that the insurer had admitted that Mary was unable to perform at least three of her ADLs, and therefore, for Mary to be paid her Category A benefit, we would only need to show that Mary was unable to perform just one more of her ADLs.
We made submissions to the AFCA explaining why Mary was entitled to her Category A benefi,t and with the support of her treating doctors, the AFCA agreed with us. In their determination, the AFCA expressed that the opinions of Mary’s treating doctors should be given weight because of their familiarity with Mary’s condition.
The AFCA ordered the insurer to pay the Category A benefit in the sum of $250,000.
The AFCA also ordered that the insurer pay Mary interest on her benefit for the unnecessary delays in approving her Category A benefit.
Mary was ecstatic with the outcome at AFCA and was so relieved that she had made the decision to investigate her entitlements further after her claim was initially approved for the minimum payment of only $10,000.
Have you been paid less disability benefits by your insurer than you believe you are entitled to?
When a person receives a disability insurance benefit that is lower than they initially thought it might be, they may accept the benefit because they feel they should be grateful or have a fear that pushing back on the insurer might cause them to lose their benefit altogether.
At Berrill and Watson, we go above and beyond for our clients to make sure they get all of the benefits that they are entitled to.
If you have received a payment (or offer) from an insurer and you’re not quite sure if it is right, get in touch with our TPD and income protection team for some free advice.
Contacting Berrill & Watson
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