The Australian Financial Complaints Authority (AFCA) has ruled “substantially in favour” of a TAL policyholder who made misrepresentations about his history of back pain.

TAL had rejected his claim made on his income protection policy after developing chronic pain, after its investigation showed that he had not disclosed relevant parts of his medical history when he applied for the policy in November 2014.

The insurer put exclusions for back and shoulder conditions on the policy, and relied on the back restriction to refuse the claim.

AFCA says while TAL has shown that it would have put a back exclusion on the policy if that misrepresentation had not been made, the insurer has the onus of proving that the exemption applies.

“There is a suggestion that the complainant’s condition might be covered by the exclusion, but that is not enough,” AFCA says in its ruling of the dispute. “The insurer must commence paying the benefit.”

AFCA says a misrepresentation is an untrue statement which a reasonable person could be expected to know is relevant to the insurer’s decision about offering insurance.

Details in the AFCA ruling show the policyholder had a recent history of back problems before he applied for the policy in 2014. Since 2013 he had been suffering significant back and buttock pain, and was referred by his GP to a specialist whom he saw on multiple occasions throughout 2014.

Yet in his policy application form, he answered “no” to the question of whether he ever had or received medical advice or treatment for back or neck pain including sciatica.

“In light of the medical history set out above, the answer was wrong,” AFCA says.

However, TAL has to still prove that the back exclusion applies and in this case the insurer did not, AFCA says.

AFCA says the insurer appears to have not asked the customer’s treating doctors whether his pain was due to the conditions set out in the exclusion.

It says the only evidence that the policyholder’s disabling condition is covered by the exclusion is the fact that his doctor said that the neuropathic pain condition arose in 2013, which is around the same time as the back condition which was investigated and treated in 2014.

“However, the fact that the condition arose at the same time as a diagnosed back condition does not necessarily mean it is the same condition or related to it,” AFCA says.

In relation to the shoulder exclusion, AFCA says TAL has not established a misrepresentation or non-disclosure in relation to the shoulder and so cannot impose the exemption.

The policyholder’s history of shoulder problems started as early as 2006 and was referred to an orthopaedic surgeon.

“It is clear there were shoulder problems in 2006, but that was eight years before the application and the medical evidence between then and the date of the application does not show any significant problems,” AFCA says.

“On balance, there is too much uncertainty about the complainant’s history of shoulder problems for me to be satisfied that a reasonable person could be expected to know, at the date of the application, that they were relevant to the insurer.”

Click here for the ruling.