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Insurer, client disagree over what makes an 'earner'

An insurance company has reached a settlement with a seasonal worker it said did not meet its definition of "earner" to qualify for total temporary disability payments.

Friday, May 17th 2019, 6:00AM 3 Comments

The man made a complaint to the Insurance and Financial Services Ombudsman about a claim filed in December 2017.

He suffered a significant injury in October that year that left him confined to bed, then in a wheelchair until January.

He made a claim for total temporary disability (TTD), which was accepted.

But the insurer advised it would cease to pay the claim from January 2018 when medical evidence stated he was no longer confined to a wheelchair.

The insurer stated the benefit was only payable while he was confined to bed or a wheelchair as, at the time of the injury, he was not working in his seasonal job and so did not count as an "earner" under the policy.

The insured argued the definition was too narrow. 

He said he had always been the "breadwinner" and was an "earner" and as such should have his benefit paid until he could return to work.

An IFSO case manager explained that the insurer was only legally required to pay if he met the definition of TTD under the policy, and in turn, the definition of “earner”.

The insured requested the insurer refund his premiums from the date it ceased to pay the TTD claim as the policy would be unlikely to offer him comprehensive cover in the future.

The insurer agreed to offer an ex-gratia payment of the amount of his premiums he had paid from January 2018 if he agreed to retrospectively cancel the policy from that date, which the insured accepted.

Tags: IFSO

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Comments from our readers

On 17 May 2019 at 8:59 am Bikedude said:
This sounds strange. Can anyone shed light on what the company and product is, as I am at a loss to explain how he would have ended up with it.
On 17 May 2019 at 11:26 am Murray Weatherston said:
Here's a googled guess based on Ms Google's response to the query "Total temporary disability"
ANZ Living expenses cover - pays up to $4000 per month for 24 months.
Covers accidental bodily
injury or illness that
completely stops the
person insured from
engaging in their usual
full-time employment or
self-employment or, if not
in full-time employment
or self-employment, they
are confined to hospital
or bed at home.
On 20 May 2019 at 3:45 pm all hat, no cattle said:
Reminds me of cases reported by Fair Go where the insured had suffered an event that to them was traumatic, but was not a 'trauma' claim as defined by their policy.

Ok, so this chap earned his income. But he was not an "earner" as defined by his policy.

TTD is a concept I've more often found in ANZ and BNZ policies. Usually without a definition allowing partial disablement.

Serious question here that I can't see has been dealt with, and it shoots straight to the buzzword of the recent FADC decision, and other MBIE/RB/FMA reports: Suitability.

If this chap was in the same circumstances when he purchased the policy, he was probably sold a dud, and refunding his premiums back to January 2018 is letting the insurer off pretty lightly. He may never have qualified for TTD at all, just the 'confinement' part, and when he out of the wheelchair, yet was still 'disabled', his claim was cut.

He should have gone after either refund back to inception, or monthly disability payments until he's back at work - whichever is greater.

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