TAL must pay a trauma claim for a customer who suffered a heart attack even though he wasn’t covered by the policy, in a decision influenced by the emerging controversy over universal terms and conditions and criticising the Life Insurance Code of Practice.

In rejecting the man’s 2017 claim on his trauma insurance, TAL argued the policy only covered more severe heart attacks. However, the policy doesn’t state that in plain language, and this was the focus of a decision by the Australian Financial Complaints Authority (AFCA).

It criticised the vagueness of TAL’s policy terms, saying the policy was “full of medical jargon” and “unable to be fully understood by anyone that wasn’t a medical expert”.

Even though AFCA acknowledged the heart attack wasn’t severe enough to be covered by either the Life Insurance Code of Practice or the trauma policy, it noted the “significant public controversy” around trauma cover for heart attacks, and ordered TAL to pay out the claim.

“Good industry practice was to align definitions of heart attack with the universal definition of heart attack,” its decision says. “Alternatively, the insurer could have made it clear to policyholders that only severe heart attacks were covered.”

AFCA rejected TAL’s defence that the customer’s financial adviser should have told him the policy only covered severe heart attacks, saying a planner wouldn’t have the medical expertise to know the definition only covered severe heart attacks.

AFCA also harshly criticised the Life Insurance Code of Practice, saying its clauses dealing with heart attacks are “fundamentally flawed”.

The clause says an insurer should assess a customer under the minimum standard medical definition of heart attack, but then lists a definition of heart attack with severe muscle damage.

The code just entrenches the ongoing problems with terms and conditions in trauma cover for heart attacks, AFCA says.

“The code provisions do not reflect good industry practice. On the contrary, they reflect poor industry practice of the past.”

TAL declined to comment on the case but told insuranceNEWS.com.au it supports AFCA’s work providing policyholders with an independent dispute resolution service.