The Australian Financial Complaints Authority (AFCA) has ruled an AIA customer who has rheumatoid arthritis does not qualify for a benefit payment as her condition does not meet the definition of “severe” as was spelled out in her trauma insurance policy.

An AFCA case manager had initially looked into the dispute and issued a recommendation in favour of the insurer but the customer rejected it, insisting she should be paid the benefit as she was suffering from a “severe” form of the chronic inflammatory disorder.

But AFCA dismissed her complaint, ruling the policy does not cover all rheumatoid arthritis and that to qualify for a benefit, the customer must meet the definition of “severe rheumatoid arthritis” as described by AIA.

In the woman’s case, the rheumatologist who was treating her says her condition is severe but he has not explained what criteria he has applied to make that assessment.

“There is no evidence before AFCA of a widely accepted method for assessing the severity of rheumatoid arthritis,” AFCA said in the ruling.

“The words ‘severe rheumatoid arthritis’ do not provide a clear dividing line between rheumatoid arthritis which leads to a benefit and rheumatoid arthritis which does not.

“Rather, a judgement about what ‘severe’ means has to be made. The definition in the policy is directed to that problem.”

AFCA says trauma insurance policies do not pay for any condition a person might suffer. Instead, they pay benefits when a person suffered from a condition listed and defined in the policy.

“Having definitions of medical conditions in the policy can give more certainty about what is covered when buying insurance,” AFCA said.

“It also provides more certainty when a claim is made, because it will be clear in most cases whether a person meets the definition or not.

“Using definitions to precisely describe what is covered and what is not is standard practice in the insurance industry. All trauma policies use definitions in this way.

“The complainant could not reasonably expect to be paid a benefit outside the terms of the policy.”

AFCA says it is fair for the insurer to apply the definitions and reject the claim.

AIA had assessed the claim under the policy’s old definition and upgraded 2016 definition of the illness, and on both occasions, the decision was made to reject the claim.

The 2016 definition requires a failure to respond to modern treatments.

“That requirement is a feature of current [severe rheumatoid arthritis] definitions across the insurance industry,” AFCA said. “I am satisfied it is consistent with good industry practice.”

Click here for the ruling.