C75

Disability premium waiver benefit – complainant shot in suspected hijacking – insurer insisting on annual review – not provided for in policy.

Background

In November 2000 the complainant, an educator, was sitting in his stationary vehicle at the school parking area when he was confronted by three armed youths and was shot at close range in the shoulder and neck. He was admitted to the intensive care unit at a hospital, underwent spinal fusion operations and was put on permanent sick leave. He was eventually discharged from his job in September 2003.

The complainant was treated by a neurosurgeon, a psychiatrist, an occupational therapist, a physiotherapist and a neuropsychologist. He was also on permanent medication. Besides his physical disabilities the specialist psychiatrist found him to be suffering from post traumatic stress disorder and paranoid traits. He also suffered from constant physical pain and discomfort together with emotional pain and suffering.

The complainant had a policy with the insurer which provided for a waiver of premiums benefit on occupational disability. He applied to the insurer for this benefit in October 2003 and the insurer admitted liability, waiving premiums for the period November 2003 to 31 October 2004 when, it stated, the claim was to be reviewed. In September 2004 the insurer insisted that a new occupational therapist’s assessment be obtained. On the strength of the OT report, in December 2004 the insurer refused to accept further liability and advised the complainant that he was liable for further payments of the monthly premiums. The complainant then provided up to date reports from his treating psychiatrist and neurosurgeon indicating that his condition was chronic. The insurer decided to once again admit liability from May 2005, but insisted on a review in April 2006, and refused to refund his premiums paid between December 2004 and May 2005. The complainant referred the matter to our office.

Discussion

The provision in the insurance contract dealing with the waiver of premium benefit did not make any provision for review of the benefit at any stage. In terms of the contract:

“the Company agrees upon receipt of proof satisfactory to the Company of the Life Assured suffering recognisable or occupational disability as herein defined and while his supplementary contract is in force, to waive the payment of all future premiums becoming due under the policy”.

“Occupational disability” is defined in the contract to mean:

“disability resulting from bodily injury or disease which has wholly and continuously prevented the Life Assured from engaging in his own occupation for a period of six consecutive months (and which will in the opinion of the Company continue to do so permanently)”.

We pointed out to the insurer that once it had made the assessment that the life assured suffered occupational disability as defined in the contract, it was obliged to waive payment of all future premiums due under the policy from 1 November 2003 until 1 March 2013, the expiry date. On this interpretation it would appear that the review which took place in September 2004 was not justified as there was no provision for any review in the contract, and the premiums paid since December 2004 as well as the costs incurred by the complainant for further psychiatric tests should be refunded.

Result

The insurer accepted our interpretation of the conditions of the policy and agreed to refund the premiums and the costs of the psychiatric tests.

SM
October 2005