A complainant fraudulently breached her disclosure duty in failing to reveal she has a form of neurological disorder that causes muscle weakness and stiffness in her legs. 

The insured had longstanding symptoms affecting her leg, resulting in a foot deformity and abnormal gait which caused her to walk with a limp, but did not disclose the conditions in her application form with MLC Life Insurance for income protection insurance in December 2003. 

She answered “no” to questions in the application form asking if she ever had joint or muscle disorders, any neurological disorders and any disability or symptoms not mentioned by the insurer. 

MLC Life Insurance discovered the complainant’s medical conditions after she lodged a claim in April 2021. She was forced to cease work in March that year because of hereditary spastic paraparesis, a condition she was first diagnosed with in May 2012. 

The insurer’s investigations into her claim found her medical records showed she had walked with a limp since the age of seven; she began to notice she had a foot deformity around age eight or nine; and a paediatrician noted a mild spasticity problem with her left foot in 1987 when she was 11. 

MLC Life Insurance avoided the policy in July 2022 and denied the claim. It said the complainant fraudulently breached her disclosure duty and if she had provided the information about her medical state, the insurance policy would not have been offered. 

The woman denied breaching her duty of disclosure and argued any breach was innocent. She said that she answered the questions in the application form truthfully and based on her reasonable understanding of her medical history. She wants MLC Life Insurance to reinstate the policy and accept the claim. 

But the Australian Financial Complaints Authority ruled MLC Life Insurance clearly informed the complainant of her disclosure duty in the application form, which she completed with the help of her financial adviser. 

The authority says the insurer has established it would not have offered the policy as it was issued to the complainant had she complied with the duty in disclosing her medical history. 

“The answers to the insurer’s questions in the application the complainant signed were incorrect and incomplete. She must have known that was the case or was recklessly indifferent about that,” the authority says. 

“Accordingly, the insurer is entitled to avoid the policy …I am satisfied that the complainant breached the duty in not to disclosing her medical history.” 

Click here for the ruling.