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Has an adviser contributed to insurance non-disclosure?


The story

Min-Jun had undergone tests for diabetes since 2011.  In January 2013 Min-Jun was diagnosed with non-insulin dependent diabetes.  In February Min-Jun’s doctor told him that if he was unable to control the diabetes with diet alone he would need medication and advised Min-Jun to come back for an eye and limb examination.


Two weeks later Min-Jun met Joo-Won, an insurance adviser, to discuss health and life insurance.  Min-Jun explains that he does not speak English and relied on Joo-Won, a Korean speaker, to complete the insurance application form for him.  Min-Jun says he told Joo-Won that a blood test showed he had high blood sugar, but Joo-Won did not indicate high blood sugar on the application form.  Instead Joo-Won stated that Min-Jun had undergone tests in the past five years as part of his immigration application, noted the test results were normal, and Min-Jun’s blood sugar needed to be controlled with food.


Joo-Won told Min-Jun the insurer, Healthy You, would check with Min-Jun’s doctor before approving cover.  Healthy You approved the application without contacting Min-Jun’s doctor.


In October Min-Jun’s doctor recommended he undergo an urgent colonoscopy and endoscopy.  Min-Jun went to a private hospital, believing the procedure would be covered by his insurance.  There was insufficient time for Healthy You to pre-approve Min-Jun’s claim, and when Min-Jun’s daughter called Joo-Won from the hospital on the day of the procedures, Joo-Won suggested Min-Jun go ahead with the procedures, and claim for reimbursement later.  Min-Jun did so, and paid the hospital $4,000.


Min-Jun’s claim for reimbursement of the medical expenses to Healthy You was declined because he failed to disclose his pre-existing diabetes.



Min-Jun said he told Joo-Won a blood test had showed high blood sugar and Joo-Won had incorrectly completed the application from.  Joo-Won said Min-Jun told him he had been tested for high blood sugar as part of his immigration application, but hesitated when Joo-Won asked about the results.  Joo-Won says he showed Min-Jun that he had written on the form that the tests showed his blood sugar was normal, and could be controlled with food.


FSCL’s review

We had some concerns about Joo-Won’s advice to Min-Jun during the insurance application process.  Joo-Won acknowledged Min-Jun was vague about the results of the blood sugar tests.  Although Joo-Won could only work with the information available to him, if Joo-Won believed Min-Jun was being vague, or underestimating the severity of his medical condition, Joo-Won should have explained the consequences of failing to disclose a medical condition on the application form.  Joo-Won also ought not to have said Healthy You would check with Min-Jun’s doctor before approving cover.


However it appeared to us the real cause of Min-Jun’s loss was his failure to tell Joo-Won about his recent diabetes diagnosis.  If Min-Jun had told Joo-Won he had diabetes we were satisfied Joo-Won would have recorded this on the application form.  Healthy You would then have either deferred or excluded cover for any condition relating to diabetes.  Healthy You would never have covered the cost of Min-Ju’s October 2013 hospital procedures.


We were also concerned about Joo-Won’s advice 8 October 2013 to go ahead with the procedures and claim later.  If Joo-Won had known about the diabetes he might well have advised Min-Jun to go through the pre-approval process where he would have learned Healthy You would not cover the cost.  Min-Jun could then have made the decision either to continue through a private hospital, and pay the cost himself, or go to a public hospital.  Joo-Won’s advice denied Min-Jun this opportunity.



We had insufficient evidence to find Joo-Won incorrectly completed Min-Jun’s application form.  It appeared to us Min-Jun’s loss was caused by his failure to tell Joo-Won about his diabetes diagnosis.  Although we had concerns about Joo-Won’s advice to Min-Jun the advice did not cause or significantly contribute to Min-Jun’s loss.  We recommended Min-Jun withdraw his complaint.