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pre-existing medical conditions in short-term insurance policies

Long-term policies can last up to 25 years, while short-term policies can be annual or for single trips only. This section of our website is principally about short-term insurance policies. But our general approach in this area can sometimes also apply to long-term products.

overview

Pre-existing conditions are medical conditions that existed before an insurance policy was taken out. Insurers usually exclude claims arising from pre-existing conditions, because insurance policies are intended to cover unexpected occurrences.

An exclusion for pre-existing conditions is common in health-related insurance policies, such as private medical insurance and payment protection insurance (PPI). But the exclusion is also used in other policies - for example, pet insurance and travel insurance.

The wording of the exclusion for pre-existing conditions varies between policies. Sometimes it will exclude claims arising either directly or indirectly from pre-existing conditions. Sometimes it will exclude only claims that are directly connected to the pre-existing condition. There is more information below on how the exclusion often works in relation to the following types of policy:

There can sometimes be confusion between pre-existing medical conditions and "non-disclosure".

We see cases where a consumer has failed to disclose a pre-existing condition in response to a question. But these are usually confined to long-term policies (for example, income protection or critical illness) - where traditional proposal forms are used and the consumer is given the opportunity to answer detailed questions about their health.

Short-term policies (for example, travel insurance) sometimes contain a brief set of questions about health or a health declaration. But in the majority of cases we see involving pre-existing conditions, the insurer is underwriting the policy only if a claim is actually made - and so the financial business asks no questions (or no substantive questions) at the point of sale.

Instead, the consumer is simply given a copy of the policy documentation, which contains either an exclusion clause relating to pre-existing conditions or a policy condition (or warranty) stating that they know of no pre-existing condition that is likely to give rise to a claim.

There is sometimes a "helpline" for the consumer to phone - to give details about their health, so that the insurer can decide whether or not to accept the risk and, if so, on what terms. This is often the case in travel policies.

In complaints we see, problems can arise either because the consumer is unaware of the exclusion or warranty; or if they are aware, they do not understand what it means in practice - or are unsure about what, if anything, they need to declare. For example:

  • Should they tell the insurer about the bad back they suffered six years previously?
  • What about the medication their doctor has prescribed for high cholesterol?
  • Does it make any difference that their father has had angina for many years?

examples of policies that may contain exclusions for pre-existing conditions

travel insurance

Travel policies may not always contain a specific exclusion for pre-existing conditions. But when they don't, they generally achieve the same result by having a condition (or warranty) that requires the consumer to confirm they are in good health and/or to declare any pre-existing conditions.

If the consumer fails to declare any pre-existing condition that they are aware of, the insurer would then seek to reject any claim on the basis of a breach of condition or warranty.

There is more information about our general approach to complaints involving travel insurance in our online technical resource.

private medical insurance (PMI)

Some PMI policies are fully "underwritten" - with the consumer asked a series of detailed questions at the outset about any relevant medical conditions. Anything the insurer is concerned about will be specifically excluded from the insurance cover.

But many policies are not "underwritten" - and instead a form of exclusion for pre-existing conditions is used. This exclusion may be similar to those seen in other types of policies - or it might take the form of a "moratorium".

Moratoriums exclude any medical conditions and/or symptoms that existed within a specified period before the policy was issued. A further specified period (often two years) must then have passed after the start of the policy - with the consumer receiving no further treatment or advice for the condition - before that condition is covered by the policy.

payment protection insurance (PPI)

PPI policies are intended to protect the consumer if they are unable to make repayments under a credit agreement - for example, a loan, credit card or mortgage.

PPI policies normally cover the risk of incapacity through sickness, disability or death. Generally they contain an exclusion clause in relation to pre-existing conditions.

The exact way in which this exclusion is framed will vary. But usually there are two parts to the exclusion:

  • treatments, consultations and medications actually received by the consumer within a specified period prior to the start of the policy (usually six or twelve months); and
  • the consumer's reasonable awareness of their health.

This means that even if the consumer has had no medication - and has seen no doctors - in the specified period, the insurer may still try to exclude the claim, if it considers that the consumer suffers from a pre-existing condition that they ought reasonably to have been aware of.

There is more information about our general approach to PPI complaints in our online technical resource.

pet insurance

A consumer making a claim for veterinary treatment may find that the insurer rejects it, if the vet has indicated that the treatment was for a condition that had been developing for many months prior to the policy being taken out - and so was a pre-existing condition.

The same considerations will apply here as in other complaints in relation to pre-existing conditions.

There is more information about our general approach to pet insurance complaints in our online technical resource.

what complaints do we see?

Complaints that consumers often refer to us are that:

  • the insurer or financial business mis-sold the policy to them; and
  • the insurer wrongly rejected their claim.

who is the complaint against?

If the complaint is about a mis-sale, it will usually be against the seller of the policy rather than the insurer - unless the seller was acting as the insurer's agent.

But if the complaint is about an insurance claim that hasn't been paid, it will usually be against the insurer that has invoked the exclusion in rejecting the claim.

In some cases, the complaint might be against both the insurer and the intermediary who sold the policy.

mis-sales

our approach

We generally take the view that insurers have the right to decide what risks they are prepared to cover (provided the terms they include do not amount to unlawful discrimination).

This means that we do not regard exclusion clauses or warranties relating to pre-existing conditions as inherently unfair or unreasonable - provided the consumer:

  • is made aware of their existence; and
  • is in a position at the time the policy is sold to understand what the relevant clauses or warranties mean.

Exclusion clauses or warranties are an important restriction on the insurance cover being offered and can have a significant impact. So the consumer must have a clear understanding of what is not included in their insurance cover.

The insurance sector has acknowledged that exclusions relating to pre-existing condition - or any warranty with the same affect - are significant and so need to be highlighted in all "advised" and "non-advised" sales.

This usually means that any exclusion for pre-existing conditions should be set out in the policy summary - for example, as a significant exclusion. In practice, in the cases we see, this is not always the case.

We are likely to uphold a complaint where a financial business does not bring these exclusions and warranties to the consumer's attention when they take out the policy. In the cases we see, we usually decide that it is not enough simply to remind the consumer to read the policy - and cancel it within the "cooling off period" if it does not meet their requirements.

In deciding whether a policy was mis-sold, we ask the financial business for clear evidence that the exclusion or warranty was drawn to the consumer's attention before they committed to buying it.

We will ask for evidence such as recordings of phone calls, or clear and unambiguous covering letters or leaflets (preferably which the consumer has signed as having read and understood).

"advised sales"

In "advised sales", the onus is on the financial business to ensure that the policy is suitable for the consumer's demands and needs. This may include identifying whether the consumer has any pre-existing conditions that are likely to be excluded from cover.

It also involves drawing the consumer's attention to the main restrictions and limitations in the policy.

If the consumer asks a financial business anything - or gives it any information about their circumstances - the business must be careful not to give any advice, or the sale will be treated as an "advised" sale. If the consumer provides information that makes it clear the policy is unsuitable, the financial business will usually have to check the policy is suitable.

"non-advised sales"

In "non-advised sales", the onus is still on the financial business to highlight exclusions relating to pre-existing conditions. It may do so, for example, by giving the consumer a policy summary.

But the consumer must make their own checks about the suitability of the cover. The financial business is required to do no more than establish that the consumer is eligible for the policy.

This is unlikely to be a significant issue in relation to travel insurance - where there are few eligibility requirements other than in relation to age.

But in the case of PPI, a consumer may be ineligible for a number of reasons - for example:

  • age
  • absence from employment due to disability
  • being unemployed or self-employed
  • being on a short-term contract
  • being aware of imminent job loss.

putting things right in a mis-sale

If we decide that a policy was mis-sold, our approach to putting things right will depend on the particular circumstances of the individual case.

  • If the consumer would have taken out the policy even if they had been made aware of the exclusion, we will generally decide that the financial business does not have to make a payment.
  • If the consumer would not have bought the insurance if they had been made aware of the exclusion, we will generally decide that the financial business should refund the premium plus interest (calculated at 8% simple a year less any tax due - or the loan rate if that is applicable).
  • If the consumer would have obtained cover from another financial business had they been made aware of the exclusion, we will generally decide that the financial business should treat the consumer as if the alternative cover had been provided. This involves compensation equivalent to the amount of the settlement, if the claim had been valid.
  • If the financial business did not make the consumer aware of the exclusion - but knew they were relying on the insurance in deciding to take on another financial commitment (for example, a loan, a holiday or vet's fees) - we may decide that the business is liable for the financial consequences of the claim not being met.

The following (non-exhaustive list of) factors may indicate that the claim should be paid:

  • the financial business knew, or should reasonably have known, that the consumer was ineligible for part or all of the policy because of their pre-existing condition;
  • the consumer was led to believe that they would be covered in any event;
  • the consumer disclosed their pre-existing condition(s) but the financial business continued with the sale regardless, failing to advise the consumer about the implications should a claim arise; or
  • the consumer became ill between the date of buying the insurance and the date the cover actually started.

Where appropriate, we may also tell the business to pay the consumer compensation for distress, inconvenience or other non-financial loss.

rejected claims

our approach

If we decide that a policy was not mis-sold, we will then look at whether the insurer was entitled to reject the claim.

We usually decide that an insurer is not entitled to reject a claim on the basis of a pre-existing condition if the consumer did not know that they (or their relative or pet, if relevant) had a pre-existing condition.

medical evidence

An insurer decides whether a claim is excluded by asking the consumer's doctor to certify the condition giving rise to the claim - and to state when it was first diagnosed or when symptoms were first reported.

In most cases where the consumer is in dispute with an insurer over the exclusion of a claim, the doctor's evidence will be enough for us to decide whether the insurer has acted fairly.

But there are cases where we will require more detailed medical evidence - such as the medical notes, hospital records, or even a consultant's report. This is especially likely, where there is no apparent link between the condition giving rise to the claim and the pre-existing condition.

In cases where the consumer had a pre-existing condition but the claim arose from an unrelated condition, we generally decide that the insurer should pay the claim.

The cost of obtaining medical evidence should usually be met by whichever side is seeking to rely on it.

undiagnosed symptoms

Problems can arise where the consumer's medical records indicate that, prior to the start of the policy, they (or their relative or pet, if relevant) were displaying symptoms that are subsequently known (or thought to be) related to the medical condition that gave rise to the claim.

In these circumstances, no diagnosis may have been made at the time the policy was taken out - and so the consumer argues that they were not aware they had the condition.

This could be the case where the consumer has been displaying symptoms that might be an indictor of a serious condition but which, equally, might be minor.

For example, a consumer suffering from headaches is not necessarily "ill" - and may not consider themselves to have a "condition" that needs to be declared. Yet if the consumer subsequently has a brain tumour diagnosed - which gives rise to an insurance claim - the headaches may well be related to this in some way.

Many insurers include wording in their policies to exclude pre-existing conditions that existed at the start of the policy but were not yet diagnosed. Even if this wording is included, we generally take the view that claims should not be excluded where the consumer had suffered only from some undiagnosed or minor generalised symptoms at the start of the policy.

However, when we decide whether a condition was "pre-existing" within the meaning of a policy, we take into account the following considerations:

  • the intensity of the symptoms;
  • the seriousness with which they were regarded;
  • whether the consumer was undergoing tests or had been referred to a consultant;
  • the eventual diagnosis;
  • any treatment given;
  • the extent of the connection between the pre-existing condition and the condition that gave rise to the claim - and the foreseeability of this; and
  • whether the consumer could reasonably be expected to have been aware that they might have to make a claim as a result of the symptoms.

The insurance sector accepts that ordinary consumers are not expected to have expert knowledge about the state of their health (or the health of others on whom cover depends).

We normally take the view that it is not reasonable for insurers to exclude claims - if they would have accepted the risk at proposal, had a full underwriting procedure been carried out.

historical or dormant medical conditions

We see complaints where the insurer has rejected a claim because of the recurrence of a condition that the consumer considered to be long-since dormant or fully resolved - for example, a bad back or stress.

Usually the insurer will be relying on the part of the exclusion for pre-existing conditions that relates to the consumer's "awareness". This means we will need to decide whether the consumer could properly consider that they were "cured" at the start of the policy.

We generally take the view that the consumer had no pre-existing condition that could be considered relevant, if - at the start of the policy - they had not consulted their doctor, and had no medication or treatment, for a couple of years or more. The consumer's medical notes are often decisive in showing this.

However, we take into account the nature and seriousness of the condition in each case. Just because a condition is under control - and the consumer has learned to live with it - does not mean that it can be ignored.

For example, if a bad back requires regular osteopathy and analgesics to stabilise the pain, then the condition should probably be excluded as pre-existing.

Similarly, where a consumer has previously had a heart attack, the condition is unlikely to be forgotten and will probably require life-long medication to keep it under control.

pregnancy

Most insurance policies specifically exclude claims arising from pregnancy - whether or not the consumer knew she was pregnant when taking out the insurance.

Cases we see involving pregnancy and travel insurance include disputes where a consumer decides not to have anti-malaria treatment after learning she is pregnant - and so is unwilling to travel as planned. Claims are generally not covered in these circumstances.

Some policies also exclude claims if the consumer travels after a certain period during the pregnancy.

Pregnancy is not an illness or sickness. However, the insurance sector has agreed to meet claims that arise from the complications of pregnancy. This is because these are normally neither anticipated nor foreseen by the consumer (although they may well be foreseeable from a medical perspective).

putting things right where a claim has been wrongly rejected

If there is no mis-sale - but we are satisfied that the insurer should not rely on the exclusion for pre-existing conditions - we usually tell the insurer to pay the claim plus interest (calculated at 8% simple a year less any tax due) from the date of the loss to the date of actual settlement.

Where the policy concerned is PPI, we take into account whether the consumer kept up their repayments.

  • If so - as a general rule, we tell the insurer to pay the benefits plus interest (calculated at 8% simple a year less any tax due) from the date(s) the repayments were made to the date of actual settlement.
  • If not (ie where the consumer defaulted on their repayments) - as a general rule, we tell the insurer to pay interest at the rate(s) and for the period the consumer was actually charged, together with any penalty fees or other charges for which they may have become liable.

Where appropriate, we may also tell the business to pay the consumer compensation for distress, inconvenience or other non-financial loss.

help for businesses and consumer advisers

contact our technical advice desk on 020 7964 1400

This is part of our online technical resource which sets out our general approach to complaints about a wide range of financial products and issues. We would like your feedback on how helpful you found it. Please also use the feedback form below to tell us about anything you think we could clarify or explain better.

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  • The law requires us to decide each case on the basis of our existing powers and what is fair in the circumstances of that particular case.
    We take into account the law, regulators' rules and guidance, relevant codes and good industry practice at the relevant time.
    We do not have power to make rules for financial businesses.
    Our current approach may develop in the light of circumstances disclosed by further cases we receive.
    We may decide that fairness requires a different approach in a particular case.