The insurance cover
In 2006, Iain took up the option to be provided life and total permanent disability (“TPD”) cover under a group insurance policy his employer at the time, ABC, had in place for its staff members. In 2007, Iain had a heart valve operation and continued to have a heart condition (“the pre-existing medical condition”).
Iain ended his employment with ABC on 5 October 2012. He wanted to continue with the insurance cover he had under ABC’s group policy, which was an option for him when he ceased his employment with ABC. In order for cover to continue for him under a personal policy, Iain needed to tell this to the insurance broking company, Best Brokers, which managed the group policy for ABC. There was a short time period of 60 days after a staff member’s employment ended with ABC for them to take advantage of the option, during which acceptance of cover would be guaranteed.
The exit form
Iain said he gave an exit form indicating he wanted his cover to continue (which he was given at his exit interview with ABC), to the ABC receptionist as he left. Iain said the receptionist would often assist staff by sending personal mail to save staff a trip to the post office. Iain said he gave the receptionist 50 cents for the postage but did not remember whether the form was in an ABC envelope or a blank envelope. Iain then headed overseas for two years. Iain’s sister was picking up his mail on his behalf in New Zealand, but she did not receive any returned post about Iain’s insurance.
Best Brokers said it never received the exit form from Iain and the guaranteed acceptance period expired. This meant that Iain no longer had cover for his pre-existing medical condition and was finding it difficult to get further cover.
Iain’s further contact with Best Brokers
Iain contacted Best Brokers on 18 December 2012 through its website and said he wanted to keep the life and TPD benefits. A Best Brokers’ staff member emailed Iain back and asked for his policy number. Iain emailed back providing this, but then there was no further reply from Best Brokers.
Iain then did not pursue the matter further until April 2014 when he contacted FSCL. Iain said this was because he had remained overseas and thought it would be difficult to sort out the insurance issue from overseas.
Upon receiving the complaint, Best Brokers tried to assist Iain in having the benefits under the life and TPD policies moved onto personal policies. Unfortunately, Best Brokers was unable to do this.
We reviewed all of the correspondence and specifically, the information provided by Best Brokers to ABC employees about how to continue with the benefits under the group policies as personal policies following the end of employment with ABC.
We found that the instructions were clear that it was up to the exiting employee, that was, Iain, to contact Best Brokers within 60 days. When Iain contacted Best Brokers in December 2012, he was outside the 60 day period and there was little Best Brokers could do to assist. We also noted that there was a long delay until April 2014, before Iain raised the issue with Best Brokers and FSCL.
We could see that Iain wanted to keep the insurance cover, but, in the absence of firm proof that Iain sent the exit form we accepted that Best Brokers did not receive it. We also thought it would have been prudent for Iain to follow up with Best Brokers whether the form had been received, especially when premium deductions from his bank account did not commence.
Iain argued that Best Brokers had a duty to be in contact with him after his employment ended. In our view, Best Brokers had no such duty. This was because Iain’s relationship with Best Brokers was as an insured person under a group policy held by ABC. When Iain’s employment with ABC ended, his benefits under the group policy ceased. As Iain was not a Best Brokers’ personal client, Best Brokers was not obliged to contact him to check whether he wished to continue with his previous entitlements; it could assume when it did not receive the exit form or any further notification from Iain within the 60 day period, that he did not want the cover to continue.
Rather, the onus was on Iain to ensure that his entitlements continued. We found that there was no fault on Best Brokers in the way it had acted, and although we sympathised with Iain’s position, his complaint was not upheld.