Need to know
- June's Zurich insurance policy said she was covered for ovarian cancer, but the insurer claimed it was an administrative error
- Zurich pushed back hard when June insisted she was covered and asked her to agree to a retrospective policy change
- An AFCA ruling in June's favour said Zurich had breached its claims handling obligations under the Life Insurance Code of Practice
Challenging an insurance claim knockback isn't easy under any circumstances, but going through the process when you're suffering from stage 3C ovarian cancer and recovering from several gruelling rounds of chemotherapy is that much harder.
It's the story of a woman we'll call June, 61, who was diagnosed in September 2019 and has since undergone a number of surgeries in addition to chemotherapy. She lost 15 kilos during treatment and was unable to work or care for herself or her family.
Under the guidance of an insurance broker, she'd switched to Zurich insurance from her previous life insurer two years earlier. As had been the case with her previous cover, she'd made sure her new $200,000 trauma insurance cover was not limited by exclusions.
"I was so sick that it wasn't until a year later in September 2020, when our policies came up for renewal, that I even thought to put in a claim," June says. "My husband and I spoke to the insurance broker, who supported and encouraged us."
But putting the claim together was going to take some effort.
"It requires you to do significant amounts of paperwork, with the oncologist and all of that, and complete and send in all the forms and all the test results," June continued. "And I found that very traumatising, to be honest, just as I was stepping out of active treatment to have to gather all that paperwork and read through it all again. But I also thought, well, that's part of the deal."
Zurich says yes, then no
The claim was lodged and Zurich initially responded favourably. But then the company changed tack.
With a diagnosis of ovarian cancer, I would never be able to change insurance companies. I knew they were trying to avoid their obligation
"First they asked the insurance broker to ask me to withdraw the claim, so that if I wanted insurance at another company I could move to another company," June says. " I found this shocking. With a diagnosis of ovarian cancer, I would never be able to change insurance companies. I knew they were trying to avoid their obligation."
Zurich acknowledged that her policy documents did say she had trauma cover without exclusions but claimed this was an administrative error. The company claimed that they had not intended to cover breast or ovarian cancer.
Of the 1623 complaints to ASIC across the life insurance sector in 2020–21, denial of claim was the second most common type of complaint.
Exclusion added after the fact
Zurich said June had agreed to an 'alteration of application' in August 2017 that imposed a breast and ovarian cancer exclusion on the trauma and TPD cover in her policy due to a family history of the illness.
The change was not reflected in the policy schedule sent to June at the time nor in any subsequent annual renewal documents, all of which listed $200,000 trauma cover with no exclusions.
Only after the trauma claim was lodged in September 2020 did Zurich send June an updated policy schedule that listed the trauma cover exclusion.
They sent me an email telling me to sign a form saying I agree that the policy be retrospectively changed to not cover breast and ovarian cancer
June maintains she never agreed to have the breast and ovarian cancer exclusion added to her trauma cover. She says she signed the alteration of application document on the advice of her insurance broker during the negotiation process with Zurich with the understanding that the final policy document would not have such an exclusion.
June's understanding was that her broker had ultimately negotiated trauma cover without exclusions, as reflected in the final policy document she had agreed to and kept on file. (The original insurance broker who'd recommended the Zurich policy in 2017 had retired by this point.)
But Zurich stuck to its own version of events.
"They sent me an email telling me to sign a form saying I agree that the policy be retrospectively changed to not cover breast and ovarian cancer," June says. "And if I didn't sign that, they would take it to court to have a court do that."
AFCA accepts the case
Despite her illness, June found the energy to fight back. She sought the advice of a lawyer, which led to a complaint being lodged with the Australian Financial Complaints Authority (AFCA).
"We sent it off, and it disappeared into the bowels of the earth for a couple of months," June says.
Then she got an email saying ACFA would accept the complaint.
(In 2020–21, the agency received 115 complaints about trauma insurance and 184 TPD-related complaints. Of the 1623 complaints across the life insurance sector, denial of claim was the second most common type of complaint.)
"AFCA was great, but you're just so sick that going through the whole process just keeps putting you back in the trauma of illness," June says.
We have conducted an internal review to ensure we understand where we can improve in light of this case
Zurich spokesperson
About a month later June found out that AFCA had ruled in her favour on all counts, instructing Zurich to pay the $200,000 claim plus interest, pay most of her legal costs, pay $3500 for non-financial loss, and refund her $332 monthly premiums back to September 2019.
The August 2021 AFCA ruling was technically a recommendation, but the dispute resolution service indicated it would move to a binding determination if the recommendation wasn't accepted. "The insurer has breached its obligations under the Life Insurance Code of Practice for its claims handling process," AFCA wrote.
Zurich had 30 days to accept or reject the AFCA decision. On day 29, June got a text saying the company accepted it.
A Zurich spokesperson told CHOICE: "Our initial decision to decline the claim was based upon evidence of correspondence between [June] and us, to exclude cancer from the trauma policy. Once we received AFCA's view, we accepted their recommendation concerning payment of [June's] trauma claim and have since paid her. We wish [June] well in managing through her illness. We have conducted an internal review to ensure we understand where we can improve in light of this case."
(The woman's real name has been removed from the Zurich response.)
Zurich claimed the inclusion of breast and ovarian cancer cover was an administrative error on their part.
'A year fighting an insurance company'
In late October 2021, more than a year after lodging her claim with Zurich and two years after her diagnosis, her insurance claim and other payments began to come through.
"I'm really thrilled, and I can't tell you how my mental and physical health has improved," June says. "I can't even believe that I've been through it."
It was almost like, you know, go away and die and do it quickly and quietly
June says her faith in the institutions we should be able to trust has been shaken.
"It was almost like, you know, go away and die and do it quickly and quietly," she says. "That was the message from Zurich as far as I was concerned. And I found that really shocking. Only one in three women with a diagnosis of stage 3C ovarian cancer lives for five years, and I find it terrible that I have had to spend a year of this time fighting an insurance company."
Editor's note:
As a cancer survivor, CHOICE member June reached out to us and decided to go public with her story to inform other people in similar circumstances what to expect when fighting an unjust insurance claim denial and to encourage people to make the effort despite the obstacles.
Stock images: Getty, unless otherwise stated.
