Life Insurance Ireland

life and critical illness insurance – asthma – inadvertent non-disclosure

Mrs B applied for life and critical illness cover in March 2000 during a face-to-face meeting with a representative of the insurer, who completed the application for her.
Several years later, after Mrs B developed breast cancer, the insurer declined her claim on the grounds of reckless non-disclosure. And it avoided the policy (in other words, treated it as if it had never existed).
The insurer said this was an instance of reckless non-disclosure because Mrs B had failed to mention that she suffered from asthma, even though several of the questions on the application form should have prompted her to disclose this. It said that if it had it known about her asthma, it would have increased the premium.
Mrs B challenged the insurer's decision. She said she had informed the representative about her asthma at the time she applied for the policy. He had said the insurer was not interested in such 'run of the mill' matters. He had told her there was no need to mention the condition because it was fully controlled by an inhaler and she had never had to use a nebuliser or go into hospital because of it. The insurer disputed this – and said it had a statement from the representative confirming that he would never have suggested that an applicant omitted details of any health matter, however trivial.
complaint upheld
We found that Mrs B had disclosed her asthma on a separate application she'd made to the insurer a few months later, through a different representative. It was clear from her medical records that Mrs B's asthma was well-controlled, and she had never needed to use a nebuliser or go into hospital because of it.
We also noticed that the application form, which the insurer's representative had completed for Mrs B, contained several mistakes. These included the fact that he had ticked the box indicating that Mrs B was a non-smoker but had also stated that she smoked an average of five cigarettes a day.
Mrs B had disclosed her asthma in a subsequent application to the same insurer, so we accepted that she had not intended to keep quiet about the condition. And in view of the mildness of her asthma, it was plausible to believe that the representative might have told her there was no need to mention it.
We could not be certain what had happened during the meeting between Mrs B and the insurer's representative. It was clear that the representative had guided her through the application. The mistakes on the form suggested that he might not have captured accurately all the information that she gave him. However, he insisted that he had followed the correct procedure. We thought it likely that there had been a misunderstanding about what information needed to be disclosed on the form.
Mrs B had signed the declaration stating that the information on the form was true, to the best of her knowledge and belief. We were persuaded by the evidence that she had assumed the representative had recorded her answers correctly, so she had not thought she had any reason not to sign it. In any event, she had not been given a copy of the answers to check before signing.
In the circumstances, we were unable to conclude that Mrs B had been reckless in her approach to the application. There was nothing to suggest that she had not cared whether her answers were true or false. So we concluded that any non-disclosure was likely to have been inadvertent.
We required the insurer to meet the claim on a proportionate basis. In this case, that meant the insurer should calculate the premium that Mrs B would have been charged, if her asthma had been disclosed on her application form. It should then pay a proportion of her claim, equivalent to the proportion of this premium that she had actually been charged. It should also pay her interest on this amount.