Back cracking, but cover lacking

In January 2014 Brian, a 55-year-old builder, completed an application for mortgage protection and health insurance.


Brian disclosed in the application that he had broken his leg in 1982, had TB as a child and had suffered a bad back strain in 2003 which had injured his sciatic nerve and required treatment. Brian also disclosed that he regularly went to a chiropractor for ‘general health’ reasons.


Brian didn’t pay his insurance premiums on the policy and, after a few months, his cover lapsed.


Brian decided to renew his insurance cover and met with a local insurance adviser in September 2015. The adviser recommended a mortgage protection insurance product and had Brian complete an insurance application form which they went through together.


Brian did not disclose his medical history on the application form as he felt that it would not be relevant to his new mortgage protection cover. The adviser did not ask Brian whether he had previously had insurance cover. Brian’s policy was accepted and placed by his insurer.


In January 2017, Brian suffered a shoulder injury. Brian went to his chiropracter who manipulated the shoulder and it felt better. Unfortunately, Brian’s shoulder worsened and by July 2017 he was unable to swim. Brian’s chiropracter referred him to a doctor.


Brian’s doctor did an ultrasound of the shoulder and found that the muscle had been partially ripped from the bone, and that he had overstrained it.  In December 2017 Brian underwent surgery to repair his shoulder and was off work for a few weeks.


Brian filed a claim with his insurer. Brian’s insurer reviewed his full medical history and declined to cover the time Brian was off work. The insurer also cancelled Brian’s insurance cover saying that, had it had full disclosure of Brian’s medical history, it would not have insured him. The exclusions the insurer would have added to Brian’s policies for any conditions relating to his full spine, right shoulder, migraines, right hip, and left leg, would have taken Brian outside the insurable range for any cover.


Brian complained and, after considering Brian’s position further, the insurer agreed to reinstate the policy, but with exclusions for Brian’s full spine and his right shoulder. Due to the right shoulder exclusion, Brian’s claim remained declined.


Brian felt his adviser had badly let him down. Brian felt that his adviser did not ask him the right questions about his medical history when he applied for insurance, and also that the adviser did not make it clear to him that he needed to disclose his full medical history.


Brian complained to FSCL. 



The adviser did not consider that he had done anything wrong. The adviser said he felt he had made Brian fully aware of the need to disclose all pre-existing health conditions, that he had spent some time reading the detailed health questionnaire with Brian concerning pre-existing medical conditions, and that the adviser had made Brian aware that if a claim was made it was likely that the insurer would contact Brian’s GP for Brian’s full medical history.



We asked the adviser to provide us with his full file on the placement of Brian’s insurance, including all disclosure given to Brian and the completed application form.


There were not a lot of contemporaneous notes or letters of advice from the adviser to support his position. However, on the balance of probabilities, we considered that it was more likely than not that Brian had not told his adviser about his previous medical history, and the extent of his visits to the chiropractor over the years.


We considered that Brian had visited the chiropractor so often that it would have been something a reasonable person would have disclosed when asked general questions about their health.


We found it difficult to believe that, had the adviser known the extent of Brian’s visits to the chiropractor, the adviser would not have ensured those visits were disclosed to the insurer. We considered it likely that, had this disclosure been made to the adviser, the adviser would have asked further questions resulting in full disclosure.

We also found that the adviser had not asked Brian about any insurances he had held in the past. We considered that this was an oversight by the adviser, particularly where the client concerned was middle-aged and self-employed in a physical profession.


We considered it likely that had the adviser known about the previous cover, he would have become aware of the previous disclosure and would likely have made further enquiries.

We also noted that the adviser should have made further enquiries of Brian, given that he was presenting as a 55-year-old builder with no disclosures or previous ACC claims whatsoever.


However, we considered that the adviser’s failure to ask Brian the questions had not caused or contributed to Brian suffering a financial loss. Even if Brian had made full disclosure to the insurer, his claim would not have been covered because the insurer would have added   exclusions for Brian’s full spine and his right shoulder.


We found that the adviser’s shortcomings in questioning Brian gave Brian the false impression he had exclusion-free cover with the insurer, and that, had more in-depth questions been asked, Brian would have been spared the inconvenience of having to negotiate with the insurer to have his policy reinstated, albeit with exclusions.  We considered the shortcomings in the adviser’s service had caused Brian inconvenience.



After receiving and considering the submissions of both parties, we recommended that the adviser pay Brian $750 in compensation for inconvenience. Brian and the adviser accepted our recommendation.


Insights for consumers

It is crucial that you give full disclosure of all medical conditions to your insurer when completing an application for life, health, mortgage repayment and income protection insurance. It can also help to provide a copy of your medical records to your insurer at the time of application.