The complaints authority says an income protection policyholder was “consciously indifferent to the truth” when she did not disclose her alcoholism and a recent operation to her insurer.  

The woman held a policy with TAL through her superannuation provider. In September 2018, she applied to increase her income protection coverage to $4700 a month, and was accepted.

She lodged a claim against the cover in May 2021, but TAL rejected it, alleging the woman made several fraudulent non-disclosures when answering questions at policy inception.  

She incorrectly answered “no” to questions about having received medical advice or treatment for any injury to her shoulder, and around alcohol dependence or abuse, the insurer said.

Medical records showed the woman had treatment including surgery between May and August 2018 for an injury to her clavicle, about a month before she answered the policy question.  

The woman said she answered “no” because she had recovered from the injury and it was not an ongoing issue.  

An Australian Financial Complaints Authority panel says the insured’s explanation “did not ring true” and the question clearly asked if “a person has ever had or received medical treatment, which included surgery, for an injury, disease or disorder of the shoulder” – not if it was an “ongoing issue”.

It says it is “difficult to conceive of any credible reason for the complainant to have answered ‘no’ other than that it was intentional or that she did not care if her answer was true or not.  

“At the very least, on the balance of probabilities, the panel found that the complainant was ‘consciously indifferent’ to the truth of her answers about her shoulder injury.”

AFCA also says the woman inaccurately represented her alcohol usage, with treating notes from her doctor reporting she “abused alcohol for 20 years and ... was drinking 20 to 30 drinks six days a week”. She was deemed unfit to work from May 7 to June 7 2018.  

The woman rejected the assertion, saying it was “not humanly possible” to consume that much alcohol. 

She acknowledged drinking excessively as stress relief and said she had been seeking treatment, but argued her usage was in line with Australian Alcohol Guidelines that state a healthy adult consumes “no more than 10 standard drinks a week and no more than four standard drinks on any one day”. 

AFCA does not believe the omission was appropriate, noting the woman was referred to a rehabilitation service for alcoholism only a few months before the question was asked.  

“The complainant clearly knew of her issue with alcohol and yet completely omitted any reference to it, despite a question asking about treatment for it. The panel considered, on the balance of probabilities, that her omission was either deliberate or reckless, in the sense of being consciously indifferent to the truth of her answer.”  

AFCA accepts that TAL would not have provided the cover if aware of the undisclosed issues.  

Click here for the ruling.