Life insurance case study 5
life assurance – alcoholic counselling – reckless non-disclosure
Mrs M took out two life assurance policies in November 2002. One was in her sole name and the other was a joint policy with her husband. Both application forms contained the questions:
'Do you consume alcoholic drinks?'
'Are you currently receiving any medical treatment or attention?'
'Have you ever sought or been given medical advice to reduce the level of your drinking?'
Mrs M answered 'No' to each question.
Several years later Mrs M died. The insurer would not meet Mr M's claim because it said Mrs M had failed to disclose that, since 2000, she had been receiving treatment from a consultant psychiatrist in relation to 'cessation of drinking'. She had also failed to disclose that she had been attending Alcoholics Anonymous meetings. The insurer regarded Mrs M's non-disclosure as deliberate or reckless, and it avoided both policies.
Mrs M's representatives argued that she had stopped drinking in 2002. The consultant psychiatrist stated that he had been monitoring Mrs M's abstinence and not giving 'medical advice' about reducing her drinking. He also said that he had advised Mrs M that her alcohol dependency should not be considered as an illness. However, the insurer contended that Mrs M should have realised that her history of drink problems was relevant to the insurance.
complaint rejected
We decided that Mrs M had been entitled to answer 'No' to the question, 'Do you consume alcoholic drinks?' She was not consuming alcohol at that time. On the question 'Are you currently receiving any medical treatment or attention?' we were satisfied that she had been receiving medical treatment or attention from her consultant psychiatrist in relation to drinking. However, we recognised that her consultant's approach was to minimise any suggestions that his role was medical, and we accepted that her incorrect answer to the question had probably been made innocently or inadvertently.
We accepted that Mrs M had stopped drinking before 2002, but it was clear that she had continued to seek regular advice to support her decision to eliminate alcohol. So we thought her answer to the question, 'Have you ever sought or been given medical advice to reduce the level of your drinking' was incorrect. We did not agree with her representatives that advice on maintaining her abstinence was not advice 'to reduce the level of her drinking'. We concluded that there was no evidence that Mrs M had deliberately given the wrong answer to this question. But neither was it likely that her answer had been innocent or inadvertent.
In our view, she could not have stopped to properly consider the question or her answer. Had she done so, we thought it unlikely that she would have given the answer that she did; the question would have raised issues that were fresh in her mind, and that we believed she knew were important to the insurer. We therefore regarded Mrs M's answer as reckless non-disclosure.
We accepted that the insurer would not have issued either policy if it had been aware of the true facts. Its decision to decline the claim and avoid both policies had therefore been justified.