A Zurich travel insurance policyholder, who did not get full reimbursement for non-refundable cancellation costs incurred when his pre-booked holiday with his partner was called off suddenly, has lost a claim dispute.

The Australian Financial Complaints Authority (AFCA) backed Zurich’s decision to partially settle the claim to the maximum sub limit of $4000 less the applicable excess and decline the rest, as the policy did not cover for cancellation caused by an existing medical condition.

AFCA says the complimentary credit card travel policy contains a general exclusion for claims directly or indirectly arising from, or exacerbated by, any existing medical condition of a travelling companion or a relative.

The complainant lodged the claim after his partner, listed as an insured, was diagnosed in December 2019 with lung cancer. He says when the policy was activated in September that year, there was no way they could have known or suspected the partner had a serious health problem that would require them to cancel their trip.

He argued it was not logical for them to plan and pay in advance the bookings for the holiday if they had suspected the partner had a pre-existing ailment that would prevent them from going ahead with the holiday in March 2020.

The complainant also says his partner was not having screenings for lung cancer when they booked the trip. He says his partner had been diagnosed with pneumonia and was being monitored by his doctor who had prescribed antibiotics.

His partner had been seeing his doctor regularly in 2018 and 2019 for other conditions but there was no mention at all that lung cancer was a likely medical concern. The complainant says the first biopsy for lung cancer only took place in December 2019 after the policy was activated.

But details contained in the AFCA ruling showed the partner had been seeking medical consultations related to his lung before they took up the policy.

The partner had an abnormality and lesion of the lower lobe in the right lung, and while it had not yet been diagnosed as lung cancer, it had been discussed as a possibility and it was being monitored for its response to antibiotic therapy.

Other earlier medical reports, including one that was dated January 2019, referenced the partner’s ongoing treatment for a persistent ground glass change in the right lower lobe and suggested a biopsy. The possibility of malignancy was not discounted and several courses of antibiotics were prescribed without any improvement.

“The reports establish the medical condition of lung cancer had been present prior to policy activation,” AFCA ruled. “While it was not diagnosed, the possibility had been discussed and the symptoms were still under review and pending a follow up post antibiotic therapy.

“There did not need to be a diagnosis of the lung cancer at the time the policy was activated. Only that one of the criteria outlined in the definition of an existing medical condition was met, and the claimed costs were caused by or related to that same condition.”

The policy has a detailed definition of what qualifies an existing medical condition, including signs and symptoms. These include regular health reviews or check-ups and ongoing medication for treatment or risk factor control.

AFCA says the sub limit payment of $4000 was in accordance with the terms of the policy. The payment covers cancellation costs arising from an existing medical condition of a relative who is hospitalised during the period of cover and in this case, the partner required hospitalisation following the diagnosis of lung cancer.

Click here for the ruling.