Consumer, unable to work, entitled to benefits despite insurer’s decision

Income Protection

After developing a back condition, Gordon wasn't able to continue doing his job. But his insurer stopped paying his benefit when he failed a functional capacity test.

What happened

Gordon was a self-employed butcher when he developed disabling back pain. He made a claim under his income protection insurance policy. His insurer accepted his claim and started paying him benefits.

Six years later, Gordon was still unable to work. His insurer offered to make a final settlement of the claim by paying Gordon a lump sum of £167,376. Gordon decided not to take this offer and continued getting monthly payments. Three years later, Gordon's insurer got him to attend a functional capacity examination by a physiotherapist.

The physiotherapist didn't think Gordon had been exerting himself to his full ability. They said that this made it impossible to determine whether he was physically capable of returning to his work. The insurer also got video evidence of Gordon playing golf, driving and gardening. Based on these, they stopped paying Gordon's benefits.

What we said

We asked an independent consultant orthopaedic surgeon to examine Gordon and the video evidence. The consultant decided that Gordon wasn't fit to carry out work as a butcher as he had before. But they said that Gordon might be able to do some part-time work in a butcher's such as serving customers.

We noted that the insurer's policy's definition of 'disability' was very strict. In theory, if the policyholder was able to do a minor administrative element of an otherwise physically-demanding job, this could justify the insurer rejecting the claim.

But in practice, it's accepted to treat someone as disabled if they're unable to perform the 'material and substantial' duties of their occupation.

For Gordon to work as a butcher, he would have to do a lot of heavy, physical work, including bending and carrying. He'd also have to do things like preparing meat, lifting heavy carcasses and standing behind a counter for long periods of time, serving customers.

When Gordon applied for the policy, he described his normal work as an equal split between jointing and serving. This is what the insurer had based the policy on. The type of part-time work the consultant suggested for Gordon was very different to this. Any difficulty Gordon might encounter in finding this kind of work wasn't relevant to an assessment of his disability.

We agreed that Gordon was able to perform some part-time work, but only in a limited and lower-skilled role. The tasks involved would be drastically different and would pay less. His policy didn't deal clearly with this type of situation, but did provide for the payment of a reduced benefit.

We decided to uphold Gordon's complaint. we told the insurer to reinstate Gordon's claim and pay him benefits at 66% of the full rate. We also told them to make backdated payments at the reduced rates, plus interest, from the time the benefits stopped.