Long-term care insurance

We’ll look at the available medical evidence to see whether we think your decision to decline a claim is fair and reasonable in the circumstances. We might decide the decision isn’t fair if we think you’ve only relied on evidence provided by your own in-house health assessor, rather than getting the opinion of the customer’s treating doctors.

As long as the policy terms are clear, we wouldn’t usually ask you to pay a claim unless the ADL definitions had been met as stated.

The Insurance Conduct of Business Sourcebook (ICOBS) places a responsibility on you to handle claims promptly and fairly. So, for example, even if the policy terms have an exclusion that’s relevant to the complaint, we’ll look at whether it’s fair and reasonable for you to rely on it in the individual circumstances.

Reviewable premiums

We need to be satisfied that the insurer clearly told the customer that it would review the premiums and benefits. We’ll look at all of the documentation available from the point of sale including the:

• product brochures or promotional literature
• information recorded by the advisor in the fact find about the customer’s needs
• ‘reasons why’ letter from the advisor to the customer explaining the recommendation
• letter sent to the customer when the plan started, as well as the policy summary and policy document

Activities of daily living

We’ll want to know that the insurer clearly told the policyholder about the number and definitions of ADLs at the point of sale. We’ll look at:

• the information given to the customer, like product brochures, promotional literature, the ‘reasons why’ letter and policy summary
• whether the information clearly explained what ADLs are and which ADLs the customer would need to meet

If the ADLs weren’t clearly explained in the available documents, we might decide the insurer mis-sold the policy.

If we decide there isn’t enough evidence to show conclusively one way or another if the policy terms have been met, we may ask you to arrange an independent medical examination. If we do this, we’re likely to tell you to decide the claim based on the conclusions of that medical report.

If a customer dies while you’re considering a claim

In this case, we’d look at the medical evidence to see if the deceased is likely to have qualified for benefit while they were alive. If so, we may ask you to pay the benefit to the deceased’s estate from the point at which we consider the claim could, or should, have been accepted, until the date of death.

If you’re dealing with a complaint about delays

Because of the nature of long-term care insurance, policyholders often claim towards the end of their lives. This means that unnecessary claim-handling delays can be very significant. The customer may be unable to continue to live independently, so decisions need to be made quickly about their future care. They, or their families, may have to pay for care while waiting for the insurance decision, which can add up very quickly.

If there’s evidence that the claim was delayed and this caused the customer distress or inconvenience, we may award compensation for this.

For insurance mis-sale complaints we’ll usually ask you to treat the policy as if it had never been sold. We’ll say you should:

• cancel the policy from the beginning and refund the premiums paid by the customer
• add simple interest at 8% a year from when each premium was paid until the settlement is paid

If the sale was made by an independent financial advisor or an insurance broker, it won’t be possible for them to cancel the policy and refund the premium. Instead, we’ll ask them to pay compensation of an equivalent amount.

This outcome may not be in the customer’s best interests if their physical condition has deteriorated to the extent that they may be able to claim benefit at some point in the future. In this situation, we’ll discuss all of the options with the customer before recommending the cover is cancelled.