Opinion: They’ve been misled, so they mislead you

Cases of non-disclosure which initially sound breathtaking are often genuinely innocent - because clients have been told "you don't have a problem" by health professionals, and therefore don't think they need to tell you. A proposed law change probably won't help much.

Tuesday, December 22nd 2009, 5:13AM 2 Comments

by Russell Hutchinson

The problem is twofold

Insurers don't know how consumers understand the things that they read, or fail to read (based on recent evidence about literacy) on the application form. Most people have no idea what is ‘material' to the assessment of risk. Asking them to disclose everything ‘material', or ‘relevant', or ‘might affect' their application is invite amateur underwriting. Because of this Karen Stevens, the Insurance Ombudsman was recently reported as arguing for a law change to the effect that "what would a reasonable person understand an insurer would want to know?"

So far, so much the better.

But there is another side to the problem, and that's the rationing decisions made by people in our health system. Their job is a difficult one. When called upon to say to a person that an operation is not indicated in their case, based on their experience, it may be perfectly legitimate for them to say "You don't need surgery". I've even heard a client repeat that they've been told "It's not a disorder, just a condition" - and that favourite old chestnut "perfectly normal for your age". Of course, they use criteria considerably different to that of the insurer. The client hears that nothing is wrong, and then forgets about it, because they are encouraged to do so. So then, they don't write it down.

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Comments from our readers

On 28 December 2009 at 8:09 am Jyoti said:

It would be so much easier,and simpler (for the client) if insurance companies got a medical test done for potential clients before issuing policies. That would take out the guess work and the invariable heartbreak for clients when claim time comes.
No doubt this would lengthen the process of signing on clients for the insurance companies but ultimately it would be in the best interests of both the client and the company.

On 29 December 2009 at 3:41 pm A Wellingtonian said:

Ah, Jyoti, if only that were possible. But a recent ruling by the Privacy Commissioner means that Underwriters are no longer able to make blanket requests for medical records, and if the insurance industry WERE able to make blanket requests to GPs and did so for every client, even those in seemingly good health, the cost to each insurer would be astronomical. These costs would invariably need to be passed on and this would result in very unhappy customers.

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