Outrage over Sovereign refusal to pay out

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nate

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#38413 29-Jul-2009 11:52

On Campbell Live last night:

Sovereign Insurance say they will be there when you need them – but dying Christchurch man Wayne Croft would disagree.
Mr Croft was insured for more than two decades with AMP. When he took that insurance, he was as healthy as an ox, and his mum and dad were both still alive.

He was covered for life, until he bumped into an old schoolmate - an insurance salesman for Sovereign. Come to us, the old mate said, so Mr Croft did.

But now he's dying Sovereign won't pay out, citing reasons that would not have applied had he stayed with AMP.

This concerns me as a Sovereign health insurance customer. Anyone here have any feedback regarding this?

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#240095 29-Jul-2009 12:10

Sounds to me like he should have stayed with AMP.

He made the wrong choice when he decided to move to Sovereign, and when he did so he lied on his proposal. What do you expect the insurance company to do?

Most of these cases of insurance companies not paying out are related to people not telling the truth either at the time of application (non-disclosure) or at the time of claim (falsified claims). If you've been honest with your insurance company you shouldn't have a problem.

What I want to know is has this guy been to the Obudsman first? That is their job after all.

riahon

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#240096 29-Jul-2009 12:18

I am guessing this happens many times a year with every insurance company (pure speculation).

There's a reason why they call in "small print", if they can find an out, they will. Interesting that they would want to put themselves in this position when they admit the missing information on the policy has nothing to do with the cancer he has. I am guessing that with the media coverage they will soon come to the party.

Adamal

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#240097 29-Jul-2009 12:29

"Insurance" is derived from the anceient Latin. Combining the words "Insure", meaning 'to rob', and 'Ance', mean "In the daylight".

(Please note, this may or may not be true)

bazzer

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#240098 29-Jul-2009 12:31

It's not "in the small print" at all. It's in the declaration you sign on the form. Check out http://www.iombudsman.org.nz/html/faqs/did_not_tell.aspx, it's called Duty of Diclosure and it means you have to tell the company everything it needs to know to decide if it can offer you the insurance and under what terms.

Non-disclosure relates to the time the insurance was taken out, not at claim time. The fact the the claim doesn't relate to the non-disclosure is irrelevant. In theory, the company could have avoided the policy at any time but practically these issues are only noticed at claim time, for obvious reasons.

If that guy had told the whole truth on his application, the company might have excluded a number of conditions (which in this case may not have affected his claim), or they may have loaded his premium (in which case he was getting more cover for his dollar), or they may have declined him altogether (which would have been better for him as he would've stayed with AMP and they would have presumably paid out his claim).

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#240256 29-Jul-2009 18:56

Although Sovereign legally may be in the right -> morally I believe they are in the wrong.

We don't know what mental state the guy was or his full background.

From what I have read about the case he had no reason to lie on his application form as he was moving a policy from one provider to another not setting up life insurance for the first time.

Sovereign were happy to take his money however when he had a claim only then did they do some homework - the onus should have been on Sovereign to make sure he was insurable not wait until claim time then put the microscope on him.

I am with Sovereign and this situation makes me feel uneasy, I made full disclosure when I signed up – but if I ever need to make a claim whats is to stop them going back through all my medical records and trying to find a doctor’s visit or some medication at some point that I had long forgot about but should have disclosed? Its ridiculous situation, if Sovereign wants to insure someone - the onus should be on them not the poor bastard trying to make sense of thr 20 page application form.

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#240260 29-Jul-2009 19:02

They are saying that what he did not disclose is not relevant, but voids the whole policy. Surely there must be some provision, being he has paid premiums, to give him cover with grounds to decline a claim that arises based on anything he did not disclose.

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bazzer

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#240538 30-Jul-2009 11:55

Do you think insurance companies should do detailed checks on every single policy that comes through their doors? Think of the increased expenses = increased premiums. It makes sense that things are scrutinised at claim time - especially if the cover has been taken out relatively recently.

Sovereign were happy to take his money, but the onus is not on the insurance company to check that all the details are correct, it is on the applicant. If you made a full disclosure, you wouldn't have a problem. Of course, you can worry about a long forgotten doctors appointment but if you've forgotten it, it's probably not relevant. Did you forget you have a family history of cancer for example? Oops!

If the guy had disclosed all the information at the time of his application, it's possible Sovereign wouldn't have insured him at all (as I said before). You don't pay premiums based on what you're going to die of or what illness you might get in the future, you pay premiums based on the risk you present to the company and he has falsely portrayed (inadvertantly or not) his risk to the company. Sometime a partial payout might be made, reducing the sum paid out based on the loading that would have been applied if all the details had been disclosed (e.g. should have been 100% loading, then half the sum assured would be paid out) but they obviously decided not to do this in this case.

Yes, I work in the insurance industry. No, I don't work for Sovereign (they are our competitor, in fact) but these kinds of story really annoy me, because invariably all the details don't come out (privacy laws) and all that happens is it gives not only the company a bad name (not so bad for me in this case ;) ) but also the industry as a whole.

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#240544 30-Jul-2009 12:09

This is another case where a right of reply is needed in the privacy act so that companies cant get shat all over by people and not put their case.

Richard rich.ms

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#240580 30-Jul-2009 13:27

riahon:if they can find an out, they will.

Some companies invest a LOT of time searching high and low for a reason not to pay out. I know it's really, really bad in the USA.

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#240586 30-Jul-2009 13:42

Had a mate who was insured with Sovereign, he got cancer and they gave him a couple years at best. Sovereign paid out early so he could enjoy the money before he died.

I guess he answered his application honestly.

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#240612 30-Jul-2009 15:10

I've had medical insurance with Southern Cross for 15+ years, recently when I needed major surgery (at a cost of around $50K) i found that over the years the benefits of my policy had been gradually reduced to the point where they would only pay about $20K of my costs. When I signed up for the policy 15 years ago it covered up to $60K per operation.

Yes, they posted me a policy document each year telling me my benefits, but who seriously goes through one of these each year and compares it to the previous year to find out what's changed? I've now upgraded to the most deluxe policy so will be OK for the future, but the point of my story is it's well worth double checking what you are covered for with any type of insurance before you need it!

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#240618 30-Jul-2009 15:28

Easy to fix. Just don't die. :D

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kiwitrc

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#240619 30-Jul-2009 15:28

portunus: I've had medical insurance with Southern Cross for 15+ years, recently when I needed major surgery (at a cost of around $50K) i found that over the years the benefits of my policy had been gradually reduced to the point where they would only pay about $20K of my costs. When I signed up for the policy 15 years ago it covered up to $60K per operation.

Yes, they posted me a policy document each year telling me my benefits, but who seriously goes through one of these each year and compares it to the previous year to find out what's changed? I've now upgraded to the most deluxe policy so will be OK for the future, but the point of my story is it's well worth double checking what you are covered for with any type of insurance before you need it!

I think for major surgery cover, you can get a much better deal from the likes of Tower or somesuch, worth checking out.

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#240646 30-Jul-2009 16:56

I used to work for Sovereign, and when I was there, they had a culture of "we're in the business of paying insurance claims". I know of someone who died two days after his policy had terminated, and they still paid out. (He left one job on Friday, was going to sign up insurance to a new company on Monday, died on the Sunday!)

Of course, that was before they moved into a big, black, monolithic building in Smales Farm.

Please note, I'm not a Sovereign crony- I have very good personal reasons not to like them, but in this case they seem to be acting appropriately.

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DataCraft

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#240679 30-Jul-2009 17:46

Jonski: I used to work for Sovereign, and when I was there, they had a culture of "we're in the business of paying insurance claims". I know of someone who died two days after his policy had terminated, and they still paid out. (He left one job on Friday, was going to sign up insurance to a new company on Monday, died on the Sunday!)

Of course, that was before they moved into a big, black, monolithic building in Smales Farm.

Please note, I'm not a Sovereign crony- I have very good personal reasons not to like them, but in this case they seem to be acting appropriately.

Thanks for that post - that makes feel more confident about Sovereign. Having that coverage on tv3 has done a huge amount of damage to thr reputation.

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