A complainant has won her dispute with the company that arranged a reinstated trauma policy after the Australian Financial Complaints Authority ruled she was misled over coverage terms and exclusions for cancer.

She reinstated the policy in 2012 through an ANZ financial adviser who had helped her acquire the original policy in 2010.

In her complaint to the authority, she said the adviser told her she would be covered under the reinstated policy for cancer unrelated to her 2011 “breast issue”, and that she found out about the cancer exclusion only when her claim for a “bowel issue” was declined by the insurer.

She wanted ANZ to pay $172,659 in relation to the trauma claim for her bowel issue, a sum she said comprised her cover amount of $162,886 plus inflation of about 6% since September 2022. She sought an additional $100,000 because she had to work during her illness as her claim for the bowel issue was unsuccessful.

ANZ said the complainant should have known from the relevant documentation that she would not be covered twice for cancer.

But the authority has rejected the bank’s argument.

It says the woman sought clarification from the financial firm regarding exclusions under her trauma cover after receiving confirmation of the reinstatement. The adviser’s reply via email on October 17 2012 was “incorrect and misled” the woman, who had expressed surprise that the exclusion in the reinstated policy schedule did not specify her breast issue. 

An extract of the email reproduced in the authority’s ruling shows the adviser wrote the following: “What they tend to do these days is because cancer is such a large condition and it can [affect] so many different types of the body ... they look at it on the basis that they will never pay out on the same condition twice but another cancer may arise which is totally unrelated to the first which may trigger another payment if it can be proven that it wasn’t [an] effect of the original course.”

ANZ said the email was “potentially misleading” but argued the woman did not rely on the correspondence because she had already accepted the reinstatement before the exchange with the adviser.

The complaints authority disagrees with the bank, pointing out the woman discussed the reinstatement with the adviser before and after the policy was issued, and the email was part of their ongoing correspondence about terms of coverage.

“The complainant continued to rely on the email for over 10 years as she renewed her reinstated trauma policy,” the authority said. “If the contract between the insurer and the complainant has been found to exclude cover for all cancers, for all carcinomas in situ, for all cancers where a claim has already been paid for carcinoma in situ and for all carcinomas in situ where a claim has already been paid for cancer (which the information says is the case), then the financial firm’s email of October 17 2012 to the complainant is incorrect and misled the complainant.”

The authority says the financial firm’s misleading statements caused the woman direct loss of $162,886, which is the cover amount under the reinstated trauma policy as of September 2022, and must compensate her for the loss.

The woman also suffered a non-financial loss, which the authority assessed at $3000.

Click here for more from the ruling.