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FSCL won’t pre-determine potential claims

Charles telephones his travel insurer

In January 2015 Charles booked a holiday to South East Asia. Charles received complimentary travel insurance with SEA Insurance (“SEA”) when he booked overseas travel using his bank credit card.

On 11 February 2015 Charles telephoned SEA. Charles said he disclosed the following medical conditions:

  • A broken leg and broken patella suffered as a result of a motorbike accident in 1987.
  • Leg pain he suffered at the end of a long flight in 2012. Subsequent tests at Auckland Hospital did not find the cause.
  • He had been taking medication since 2008 to reduce his cholesterol. Charles said this was purely a precautionary measure as he has never been diagnosed with a cardiovascular disorder or high blood pressure.

SEA advised Charles that it would cover him for his disclosed conditions if he paid a premium of $100. SEA confirmed that unless Charles paid the premium there was no cover under the policy for:

  • Any pre-existing medical conditions whether Charles told SEA about them, or otherwise.
  • Any other condition that arose from or was related to Charles’s pre-existing medical conditions.


The complaint

Charles disputed paying the $100 pre-existing medical condition premium. Charles believed that he did not have pre-existing medical conditions as defined under the policy.

Charles wanted FSCL to determine, before he travelled, whether SEA was correct to decide that he had a pre-existing medical conditions based on the medical history he disclosed. Charles argued that SEA was in breach of contract by failing to provide full cover and by incorrectly applying a standard industry fee.


FSCL’s position

From the information we received about Charles’s medical history, it appeared that he may have a pre-existing medical condition as defined in the policy.

We found that it was reasonable for SEA to:

  • conclude that Charles had pre-existing medical conditions for its underwriting purposes
  • require Charles to pay its standard premium of $100 to cover those pre-existing medical conditions.

However, we were not prepared to pre-determine that an investigation of any complaint Charles may have in the future would definitely find that Charles had pre-existing medical conditions.

It is not our role to make pre-determinations about hypothetical claims that may arise in the future. If we were to make a decision about whether Charles had a pre-existing medical condition before a claim was made, this could be very unfair to Charles and SEA. Further, if dispute resolution schemes made decisions on whether consumers have pre-existing medical conditions before a claim is made, this would undermine the right of insurance companies to assess claims, leading to absurdity.

If Charles chose to not pay the $100 premium and in the future he had a claim that was declined, Charles could use our services at that point.