Life Insurance Ireland

In April 2002, Mr J applied for income protection insurance. He answered 'no' in response to a question on the application form about whether he had received any medical treatment or had any medical consultations in the previous two years. He gave the same answer when the question was put to him during the medical examination that the insurer arranged for him in June 2002.
The application form contained a warning, reminding him he had a duty to inform the insurer immediately if – as a result of anything that happened before the start of the policy – he needed to change any of his answers.
In August 2002 Mr J developed a serious condition which he had not suffered from before. He had a number of consultations about it with his doctor, who prescribed treatment in September 2002 and certified Mr J as unfit to work for the next two months.
The insurer said it sent Mr J a letter in October 2002, confirming its acceptance of his application and asking him if there had been any change in his medical condition since he completed the application form. The policy started a week later.
Just over a year later, Mr J developed leukaemia. The insurer rejected his claim, saying he had been reckless in failing to disclose the medical condition that had arisen in August 2002. The insurer said it would not have been prepared to cover him if it had known about this condition.
Mr J said he never received the insurer's letter in October 2002. And he said that, in any event, the medical condition that had arisen in August 2002 had nothing to do with his claim for leukaemia. Unable to reach agreement with the insurer, Mr J referred his complaint to us.
complaint rejected
We thought it probable that the insurer had sent the letter in October 2002, even though Mr J could not recall receiving it. So we considered that by sending this letter, and by including the warning on its application form, the insurer had given Mr J adequate warning of the need to disclose any changes to his health since he had applied for the insurance. However, we noted that the insurer had not sent him a copy of his original application form with this letter, so that he could assess what changes were relevant to the insurer.
We decided that Mr J had not intended to mislead the insurer. We took into account how close – in time – the emergence of the new medical condition in August 2002 and the outcome of the consultations were to:

• the date when he applied for the insurance
• the acceptance letter and
• the start date of the policy.

Although, in the light of the warning letter, he should have understood the need to disclose his new condition, we recognised that a duty to disclose information after an application has been accepted is a particularly onerous requirement that few consumers anticipate.
In this case we considered that, despite the insurer's warnings, Mr J had not fully understood the need to inform the insurer of any changes to his health. So his non-disclosure had been inadvertent rather than the result of a reckless disregard for the truth of his answers.
The usual remedy for inadvertent non-disclosure is to allow the insurer to rewrite the policy on the terms it would have imposed, had it known the full facts. In this case we were persuaded by the insurer's evidence that it would not have offered Mr J any cover at all, had it known about his new medical condition. So we concluded that it was fair for the insurer to:

• refuse to consider the claim
• cancel the policy from the outset and
• refund the premiums that Mr J had paid.