A complainant whose income protection (IP) benefits were terminated on grounds he was a director of a company while still receiving the insurance payments has won his dispute.

The complainant took his case to the Australian Financial Complaints Authority (AFCA) after QInsure ceased paying the benefits from October 12 2021, saying the insured no longer met its definition of Total and Temporary Disablement.

Former trustee, the Australian Retirement Trust, reviewed the insurer’s decision and agreed with it. The trustee received the complainant’s IP claim on 23 March 2020, after he ceased work due to illness in January that year relating to locally advanced cancer and a subsequent stroke.

The complainant made a claim against the IP cover and benefit payments commenced from April 27 2020 until QInsure became aware he was a director of the company.

QInsure says the complainant was engaging in an occupation after he responded to a “show cause” correspondence requesting details about the company.

In the email correspondence the complainant indicated the company “exists” to house his intellectual property relating to inventions made before he commenced receiving IP benefits and that his involvement amounted to less than two hours a week.

The complainant says the company was running at a loss, sales were less than $5000 a year and that the business is more akin to a hobby than an occupation. He also does not receive a salary from the company.

QInsure says the information provided in the correspondence “amounts to engagement in an occupation”.

But AFCA says the insurer’s decision to cease the IP benefit payments is not supported by the language of the policy.

“The insurer has not specified what it says the complainant’s occupation is,” AFCA says in its ruling of the dispute.

“Instead, it has mainly relied on his response to the show cause correspondence to indicate the complainant was engaged in an occupation.”

AFCA says it is not relevant to look at whether the complainant had the capacity to engage in an occupation.

Instead, it is necessary to look at whether the complainant’s activities amounted to him “engaging in an occupation,” AFCA says.

AFCA says the complainant’s activities as company director, which appeared to be limited to things like sending the occasional email and organising the payment of an occasional bill, do not reasonably equate to him “engaging in an occupation” of company director.

AFCA ruled the insurer should recommence the IP payments with effect from when it stopped and also interest on the unpaid monthly benefits that were owed to the complainant.

Click here for more from the ruling.