Ombuzz Issue 20 - June 2012
Issue Number 20
June 2012
OMBUZZ
EVIDENCE AND EXCLUSION CLAUSES
An insurer can only rely on an exclusion clause (e.g. suicide clause) if there is sufficient evidence to support a conclusion that a claim falls within the exclusion. This seems self-evident. However, this requirement is not always understood or applied by insurers when considering claims. Nor is it correctly understood by all claimants.
The insurer has to weigh all the available evidence and then come to a decision based on the probabilities. Where the probabilities are evenly balanced the onus will be decisive, which means that where the insurer wants to rely on an exclusion clause the insurer has the onus to prove the incident in question falls within the ambit of the exclusion. Insurers in some instances rely on speculation rather than evidence to decline a claim.
The case studies which follow demonstrate the difficulties that arise from weighing of evidence, particularly where there is little evidence on which to rely. This is a common problem with insurance claims. What makes these cases even more difficult is the fact that the money from the policy payout is often desperately needed by the claimants and therefore delays in obtaining evidence cause hardship and are met with resistance from claimants.
CASE STUDY 1
Suicide
The life assured under a funeral policy who was a known sufferer of COAD (Chronic Obstructive Airway Disease) had been hospitalised after vomiting tablets. He had been on prescription drugs for his medical condition and he allegedly took an overdose of his theophylline medication. The insurer declined the claim based on a suicide exclusion clause which stated:
“If an Insured Person commits suicide (kills himself or herself) within the first 2 years from the Start Date, or from when he or she was named under the policy, the Funeral Benefit will not be paid.”
We pointed out to the insurer that an overdose of prescription drugs does not necessarily lead to a conclusion that it was suicide. It could have been an accidental overdose. Suicide is by definition an intentional act. Suicide is also an inherently unnatural act which is contrary to human instinct. The presumption in cases of this nature is that the cause of death is accidental. We required more information regarding the circumstances of the overdose to enable us to make a decision. The insurer at first simply responded by stating that it was of the view that the deceased took an overdose with the intention to commit suicide.
When the insurer received the toxicology report it posed certain questions to the treating doctor to try and establish what the prescribed dosage was, whether it had been recently adjusted, etc. No response was forthcoming from the doctor and the insurer then discontinued further attempts at providing evidence and made an ex gratia offer of 65% of the claim. The complainant accepted the offer.
This case demonstrates that insurers will on occasion settle matters rather than spend time or money to obtain further information e.g. in this instance an opinion on the toxicology report and the likelihood of this incident being an accidental overdose.
The insurer, having the onus to prove that the suicide exclusion applies, has to provide the necessary evidence. This means that evidence of the surrounding circumstances of the death and even the state of mind of the deceased may be important in weighing the evidence.
There are instances where, however, the evidence can lead to only one probable conclusion.
CASE STUDY 2
Suicide
In this case the deceased insured life was found hanging from a tree. There were no other injuries other than the injury to the deceased’s neck and no sign of a struggle. The inquest report had no additional conclusion other than that the death was “consistent with hanging”.
It was obviously not an accident and there was no evidence from either of the parties indicating that it could have been murder. The probabilities favoured the insurer’s conclusion that it was suicide and we upheld the insurer’s decision to decline the claim.
CASE STUDY 3
Pre-existing condition
This case study from our 2004 Annual Report demonstrates our approach where there is minimal evidence and the insurer has the onus to prove that an exclusion clause applies.
The insured died at the age of 59. His death was certified, by his personal doctor, to have been due to asphyxiation during a “seizure.” When subsequently asked for more details the doctor stated that he arrived at the deceased’s house after his death and confirmed that he had died some time during the night. The doctor was aware of the fact that the insured had suffered from epilepsy manifested by nocturnal seizures and he, therefore, considered asphyxiation during a seizure to have been a likely cause of death. The insurer declined the claim on the basis of the policy condition which excluded death from a pre-existing condition. The executor of the estate wrote to our office to complain.
The cause of death was queried by our office following the receipt of a report from a neurologist to whom the consulting doctor had referred the insured. It stated “death in this case appears to have occurred relatively suddenly and without collateral evidence to indicate its cause.” According to the specialist such sudden death is generally ascribed to a “cardiac event” which, in a man of 59, would be assumed to have been acute coronary occlusion resulting in disturbed heart rhythm. In the insured’s case the question of asphyxiation arose because of his past history of epilepsy and two incidents of seizures at night. This is a recognised, but very rare cause of sudden death. In the absence of any evidence relating to the cause of death it would be distinctly unlikely that this was the cause of death. An assumption by the treating doctor that this was the cause of death appeared to have been incorrect. The medical expert to whom we referred the case agreed with this view.
The insurer was understandably reluctant to accept that the cause of death as indicated on the death certificate was incorrect. However, in light of the fact that an expert in the field and the consulting doctor were of the view that the doctor had erred in stating the cause of death, we requested the insurer to reconsider its stance. In the absence of any other evidence to suggest what the cause of death was, the reasonable conclusion would have been that the cause of death was a cardiac incident not related to a pre-existing condition. Moreover, it was for the insurer to prove its reliance on an exclusion clause when declining a claim. In this particular instance the insurer had minimal information on which to rely in support for its decision. It had to concede its inability to discharge the onus.
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Disclaimer:
Ombuzz is published for general guidance only. The information it contains reflects our policy position at the time of publication. This information is neither legal advice nor a definitive binding statement on any aspect of our approach and procedure. The case studies are based on actual complaints we have dealt with.
