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Pre-existing medical conditions and cause of death

Kadeem arranged travel insurance to cover himself, his wife and three children while he was studying at a New Zealand university.


Travel to Indonesia for the funeral

When Kadeem’s mother, Meliha, died in Indonesia, he called the travel insurer to check his insurance cover. The insurer advised that Kadeem would need to pay for the travel then submit an insurance claim with a death certificate and a medical report from Meliha’s doctor to show that her death was not caused by a pre-existing medical condition. 


Claim submitted, but more information needed

After Kadeem returned to New Zealand from the funeral in Indonesia he submitted his insurance claim, supported by the death certificate. The insurer started to assess the claim but needed more information from Meliha’s doctor about what caused her death.

Kadeem explained that his mother had a long history of diabetes, and had been undergoing dialysis for kidney failure since 2015 (before Kadeem purchased the policy). Despite these medical conditions, Meliha was in good health and died comfortably in a chair at home while taking a nap. Kadeem explained this was all he knew about the cause of his mother’s death because Meliha’s doctor was reluctant to advise a cause of death without an autopsy, and it was now too late for an autopsy.


Insurer’s delay

After two months of waiting, Kadeem contacted his insurer asking if it would accept his claim. The insurer apologised, saying the information Kadeem supplied was insufficient. The insurer still needed a medical opinion to determine the cause of Meliha’s death. When Kadeem explained he was unable to get any more information from Meliha’s doctor, the insurer arranged for its Indonesian representative to approach the doctor directly. Unfortunately, Meliha’s doctor did not respond to the insurer either.


The insurer’s view

About five months after Kadeem first made his claim, the insurer advised it was unable to accept his claim for the cost of attending the funeral because it seemed likely Meliha’s death related to her pre-existing medical conditions.


Kadeem’s view

Kadeem did not accept a pre-existing condition caused his mother’s death, saying Meliha had been in good health just before she died. Kadeem tried hard to get the information the insurer needed, but the doctor refused to speculate as to the cause of his mother’s death without an autopsy. By the time Kadeem realised the detail required by the insurer, it was too late for an autopsy. 

Kadeem also said the insurer’s delay in assessing his claim caused him considerable stress and inconvenience. Kadeem had paid for the air tickets to Indonesia using his credit card. Kadeem was forced to use all his savings to pay off the credit card, leaving his family short of money to pay for housing and food. Kadeem said that, if the insurer had declined the claim sooner, he could have applied for a hardship grant through the university where he was studying, but it was now too late.

Kadeem complained to FSCL.




Policy excluded cover for pre-existing medical conditions

We considered the insurer was entitled to decline the claim. The insurer agreed to cover travel costs relating to the unforeseen death of a relative, but the policy excluded cover where a claim arises directly or indirectly from the relative’s pre-existing medical condition.

Although Meliha’s health may have been stable for some time, kidney disease requiring dialysis suggested a fairly advanced and serious illness and should have been disclosed to the insurer when Kadeem bought the policy. It was reasonable for the insurer to ask for further information and, when the information was not forthcoming, to decline the claim.


Concerns about delay

However, we were concerned that the delay during the claims process had caused Kadeem stress and inconvenience. After reviewing new information from Kadeem, we asked the insurer whether it was prepared to pay Kadeem compensation to acknowledge the consequences for him of the delay. The insurer agreed, and offered Kadeem compensation of $500 as a goodwill gesture. We thought that the settlement offer was reasonable. 



Kadeem did not accept the $500 offered, saying it was inadequate compensation. In Kadeem’s view the inconvenience was so serious that he was only prepared to accept the maximum compensation available we can award, $2,000. Kadeem advised he intended pursuing his complaint elsewhere. 


Key insights for the participant

The Fair Insurance Code requires an insurer to decide whether or not to accept a claim within 10 workings days of the insurer having all the information needed to determine the claim. In this case the insurer asked for more information within the 10 working days, and Kadeem responded immediately with information that did not satisfy the insurer’s requirements. Although the insurer was not, strictly speaking, in breach of the Code we were of the view that was responsible for telling Kadeem the information provided was inadequate. Fortunately, the insurer could see its shortcomings and said it had taken steps to make sure it will not happen again.