OnePath must pay extra interest on a total and permanent disability (TPD) benefit amount for a claim that it took more than three years to accept, the Australian Financial Complaints Authority (AFCA) says.

The female claimant lodged a TPD claim in June 2014 for a car accident she suffered more than three years before. OnePath accepted the claim on December 12 2017, and paid the benefit amount of $750,000 on January 3 2018.

OnePath determined that interest was only payable from December 12 to January 3, while the claimant believed she should be paid interest from August 2014 until the claim was paid in 2018.

Section 57 of the Insurance Contracts Act states that an insurer is liable to pay interest when it unreasonably withholds payment of the benefit amount to the insured. The claimant said that as she lodged the claim and met the TPD definition on August 2 2014, interest payable should be calculated from this date.

However, OnePath said it became clear in 2017 that the claimant intended to follow her doctor’s advice and use powerful opioid painkillers long-term, giving her a permanent medication-induced disability and rendering her unable to work. As a result, interest payable should only be from December 12 2017.

In its decision, AFCA says the insurer failed to contact the claimant in 2015 or try to get information about the claim as part of its assessment.

“If the insurer had properly investigated the claim and obtained [the doctor’s] report dated September 2015, the insurer could have assessed the complainant as TPD on 11 October 2015. The insurer unreasonably withheld payment of the TPD benefit amount,” AFCA says.

OnePath should also have been aware that she had income protection claims with other companies and it could have obtained more documents in 2015.

AFCA determined the TPD definition was met in September 2015 and ruled that interest on the $750,000 was payable from that date.