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When is a heart attack not a heart attack?

A recent claims controversy in Australia underlines the need for insurance definitions to bear a resemblance to the words used by most humans in their day-to-day lives – or very clear explanations of the differences.

Tuesday, March 8th 2016, 11:10AM 3 Comments

by Russell Hutchinson

In Australia a TV network alleges that an insurance company’s definitions and claims underwriting are too tough. Whether or not that is the case is not possible to say without looking at an awful lot of detail. It is probably best to leave that judgement to the review process which is going on in Australia at the moment.

What I would like to focus on instead is a general principle in definitions used in insurance – that what is generally accepted as the definition of a term, such as ‘heart attack,’ should always be the main guide for defining it in the policy document.

If we do not use this as a guideline we can have difficult situations emerge. Picture a video in which the claimant tells the story of his heart attack, which happened while surrounded by medical professionals. He tells the story of how he was hooked up to monitoring devices when the doctor told him that he was having a heart attack. He relates – terrifyingly – how he heard the heart monitor flat-line. The next thing he remembers is coming back to consciousness. He was told that he had just had a serious heart attack. He was told that he was very lucky it only took one attempt to resuscitate him.

They then explain that his claim was declined.

It came to this because of a communication difficulty. Fundamentally it is this: some definitions include some tests meant to determine severity. This means that not all things that medical people define as a ‘heart attack’ will qualify. Faced with better diagnostic tools several insurers became concerned about their heart attack definitions a few years ago. Many adopted more liberal definitions, in part to prevent the development of a big gap between the meaning of the words ‘heart attack’ in the policy document and in the medical world. In essence you get to make a choice between either using a generally accepted definition or alternatively, label your definition really clearly as more limited.

It is hard for a customer to know how much worse one definition is compared to the other – because it is usually technical. But the insurance company does know. It is another example of asymmetrical information: customers know all about their health, insurers know all about risk. This is where the question of utmost good faith needs to be considered. If an insurer knows that the outcome of its definition is very different from what is commonly understood by those terms, then it probably has a duty to explain that in terms the customer can understand.

Tags: Russell Hutchinson

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Comments from our readers

On 8 March 2016 at 5:43 pm Tash said:
A heart attack is not a heart attack when what you experience (flat lining in the hospital)is most likely a cardiac arrest! A different condition with different qualifying criteria!
On 9 March 2016 at 2:18 pm RiskAdviser said:
Fair point Tash an in hospital cardiac arrest is usually excluded on trauma covers.

Heart death is the key concern and this area of medicine isn't as black and white as consumers think it is. I've heard many stories and claims over the years when the Dr says heart attack but the clinical insurance definition it isn't.

Which is the challenge as nearly heart attack and heart attack usually both come with a significant change in lifestyle.
On 22 March 2016 at 2:19 pm Mike Naylor said:
The gap which is occurring is between medical and insurance definitions, not between clients and insurers. Clients are only confused because they see two definitions.
For insurance purposes the main thing is some kind of loss or damage suffered by the client. The issues are that (i) modern medicine can find heart attacks using changes in blood components which cause no damage, (ii) hospital episodes can occur which do not extend the hospital stay. Therefore no loss. Insurers do need to more carefully and clearly redefine policies to make the need for loss clear.

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