A Zurich travel insurance policyholder has lost a claim dispute after she cancelled a holiday because her daughter was diagnosed with cancer. 

She activated cover under a Zurich group policy held by her credit card provider two years ago for a trip the pair had planned for April last year. 

The daughter, referred to as SM, was diagnosed with rectal cancer in the weeks after the policy was activated and was then unable to travel due to her treatment.  

Her mother sought reimbursement of cancellation costs, but Zurich declined the claim, saying the trip was abandoned due to an existing medical condition, excluded under the policy. Earlier this year, Zurich offered $2500 compensation for delayed handling of the claim.

The mother took the matter to the Australian Financial Complaints Authority, saying she initially thought SM’s symptoms related to known food allergies and would not have booked the trip if she had known about the cancer. 

But AFCA has ruled in favour of Zurich, saying SM had the medical condition when the cover started, because at that time she had already been referred to a specialist for investigation. 

The policy terms state that existing medical conditions include those requiring consultation with a specialist or under investigation, pending diagnosis or awaiting a specialist opinion at the time the policy was activated.  

“It would not be fair to require the insurer to cover this loss as it is excluded from cover under the policy terms,” AFCA said. “It is not a requirement that the condition be diagnosed at that time.” 

The daughter’s GP referred her to a medical specialist for investigation at the end of May 2022. The trip was booked and paid for two weeks later, and the travel insurance purchased. 

The cancer diagnosis was confirmed in August 2022. SM had surgery in December 2022 and her mother cancelled the trip three weeks later. The specialist confirmed on January 16 last year that SM could not go on the trip due to her condition, and the claim was lodged a week later.  

Zurich’s first claim denial came on April 27 last year, and it offered the compensation almost a year later on March 22. 

“I am satisfied the information provided shows SM had an existing medical condition as defined by the policy when the complainant’s cover was activated. This is because SM had been referred to a specialist for investigation of symptoms she had reported to her doctor before that time,” AFCA’s ombudsman said.  

AFCA says the $2500 compensation offer is appropriate because management of the case “fell below the expected standards”. 

“She raised a complaint with the insurer in May 2023 regarding the assessment of her claim. The insurer did not provide her with its internal review response until January 9, being well outside the expected time frame of 30 days.” 

See the ruling here.