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Sarah had medical insurance with Insurer A.  Sarah had previously had abnormal cervical smears, and so Insurer A excluded cover for those.

Sarah met with an insurance adviser with a view to changing to another insurer.  The adviser noted that Sarah’s reasons for change were to take advantage of a provision for non-Pharmac funded drugs and to secure guaranteed policy wording.

Sarah accepted an offer of insurance from Insurer B, and cancelled her policy with Insurer A.  Based on Sarah’s medical history, two specified gynaecological issues were excluded from cover: abnormal smears, and post-coital bleeding.

About a year later, Sarah approached the adviser again.  This time the adviser noted that Sarah wanted to explore other insurance options because Insurer B’s premiums had become more expensive.  Insurer C offered insurance that contained an exclusion for issues arising from what it called the ‘Female Genital Tract’ (FGT).  Sarah accepted these terms and her policy with Insurer B was cancelled.

About a year and a half later, Sarah was diagnosed with endometriosis.  She elected to have surgery in the private sector, at a cost of almost $14,000, in the hope that Insurer C would cover those costs.

Insurer C declined Sarah’s claim for the costs of her endometriosis treatment.  Insurer C said that endometriosis was a condition arising from the FGT and was therefore excluded under the policy.

Sarah complained to FSCL.


Sarah’s view

Sarah felt that the endometriosis was unrelated to the previous gynaecological issues she had experienced.  She had not had symptoms of endometriosis at the time she changed to Insurer C, so she thought it was unfair that it was captured by the FGT exclusion.

Sarah felt that the adviser had not adequately explained the FGT exclusion and how it was different to exclusions in her previous policies with Insurers A and B.  She also felt that the adviser should have tried to have the FGT exclusion reviewed by Insurer C (as the adviser had done with one other unrelated exclusion).

Sarah said she would have been in a better position with an increased level of insurance cover if she had not asked the broker for advice.  She said she did not fully understand that the exclusions in her policies with the insurers were different.


The adviser’s view

The adviser said that she would never change a client’s insurance unless they had discussed all the options and implications, and the client still wanted to change.  She said that after presenting the options to Sarah on each occasion, Sarah decided she wanted to change.



We reviewed all the correspondence between Sarah and the adviser, and we also reviewed the three insurance policies.  We considered that the adviser had given Sarah all the information regarding the policies and their exclusions.  However, it was not clear from the correspondence that the FGT exclusion, and the fact that it was so much broader than the exclusions in previous policies, had ever been properly discussed with Sarah.  We were unable to tell whether that was because of flaws in the adviser’s documentation, or whether even the adviser did not understand the breadth of the FGT exclusion.



We assisted the parties to reach a negotiated settlement.  The adviser paid a sum of money to Sarah without admitting fault.  This was acceptable to Sarah.


Our insight

When changing from one medical insurance provider to another, be sure to check whether there are any changes to your cover for pre-existing conditions.  Ensure that you fully understand the breadth of any changes to exclusions.

Advisers should take care to ensure their clients fully understand the differences between a current policy and a proposed new policy.  Advisers should also fully document their explanations to the client about the changes.