The story
Simon was a pilot working for a New Zealand company, living in Australia, flying around the Pacific. Simon’s employer arranged business travel insurance for its employees with Busy Bee Insurance. While Simon was on a Pacific island between flights he was attacked and suffered a serious brain injury. Simon was flown by air ambulance back to Australia. The evacuation costs were covered by Busy Bee Insurance.
Claim accepted
The insurance policy also provided temporary total disablement cover. The Civil Aviation Authority in New Zealand assessed Simon and decided he would not be able to fly again for between 5-10 years. Busy Bee Insurance accepted Simon was temporarily totally disabled and agreed Simon was entitled to a payment under the policy.
Policy wording
The policy stated Simon was entitled to “the weekly benefit amount shown on the Schedule ($2,000) … but not exceeding the Salary of the Insured Person.” The policy went on to say:
The amount of any benefit payable for Temporary Total Disablement will be reduced by the amount of any periodic compensation benefits payable under any Workers Compensation or Accident Compensation Scheme and the amount of any sick pay received or disability entitlement so that the total amount of any such benefit or entitlement and benefits payable under this Policy shall not exceed the percentage of Salary stated in the Schedule and/or the Salary of the Insured Person.
Claim calculation
Simon’s salary when converted to New Zealand dollars exceeded $2,000 per week, so Busy Bee Insurance took $2,000 as the maximum weekly benefit available. As an Australian Simon was entitled to WorkCover so Busy Bee Insurance deducted the weekly WorkCover payments from Simon’s $2,000 maximum benefit. Essentially Busy Been Insurance made up the difference between Simon’s WorkCover payments and $2,000. Busy Bee Insurance calculated Simon was entitled to $13,000 in compensation.
Dispute
Simon did not accept Busy Bee Insurance’s calculation, saying the policy did not allow Busy Bee Insurance to take the WorkCover payments into consideration when calculating his entitlement. Simon argued the policy section relied upon by Busy Bee Insurance was intended to make sure the payments did not exceed his weekly salary amount and not the $2,000 maximum policy limit. In Simon’s view Busy Bee Insurance had introduced a benefit cap not contemplated by the policy. Simon considered Busy Bee Insurance was obliged to pay him $67,000.
FSCL’s review
We decided Busy Bee Insurance had correctly calculated the benefit payable, by applying a maximum policy benefit of $2,000 per week and after taking into consideration payments Simon had received from WorkCover. We explained our view that the words ‘any such benefit or entitlement’ in the insuring clause must relate back to the benefits payable under any workers’ compensation scheme. Although the maximum policy benefit was not expressly mentioned in the quoted provision, it must be read in.
We recommended Simon accept the compensation offered by Busy Bee Insurance.
Outcome
Simon accepted our view, and after the recommendation was issued provided some more information to Busy Bee Insurance about his income. Busy Bee Insurance recalculated the compensation payable, increasing the amount to $25,000. Simon accepted the compensation and thanked us for our involvement.
