CommInsure rejected a woman’s insurance claim for breast cancer treatment by relying on an 18-year-old medical definition of what constituted “radical breast surgery” against the advice of specialists.
It argued she didn’t meet the policy definition of cancer because her carcinoma was in situ and her treatment didn’t include “radical breast surgery”, insisting radical surgery only referred to the removal of an entire breast.
The woman made her claim in August 2016 and her policy’s medical definitions had not been updated since 1998. Even though she needed breast tissue removed and required radiotherapy, and despite specialists advising that medical practice had moved on since the 1990s and radical treatment now involved radiotherapy and breast-conserving surgery, CommInsure still refused to pay her claim.
The woman had been paying premiums for more than 20 years. Her policy included cover for “malignant tumours” with an exclusion for “carcinoma in situ unless leading to radical breast surgery”.
CommInsure updated its cancer treatment definition, in May 2017, to include breast-conserving surgery and radiotherapy and chemotherapy, but it did not backdate the definition, meaning the woman was still ineligible.
It eventually agreed to pay the woman more than $170,000 after the financial ombudsman service (FOS) got involved.
The banking royal commission heard the case on Thursday, when the managing director of CommInsure, Helen Troup, appeared as a witness.
Troup said the experience would have caused the woman distress and she believed FOS had made the right decision.
“I imagine it caused her additional stress and I apologise for that,” Troup said. “Her claim should have been paid earlier and, again, apologise for that as well.”
She said the incident was an “isolated event” and she had found no other examples of trauma claims for breast cancer being denied inappropriately.
The royal commission heard that Australia’s biggest insurers had only recently started regularly reviewing the medical definitions in their policies to keep pace with medical advancements.
The Financial Services Council introduced a life insurance code of practice in late 2016 following media coverage of CommInsure’s insurance practices.
The code requires insurers to review medical definitions every three years at least, and to update them where necessary to keep them current.
Senior counsel assisting the royal commission Rowena Orr QC said eight of the 10 biggest insurers in Australia had admitted to having deficiencies in the past with their medical definitions updating processes.
She said MLC and AIA did not have any definition review policies until last year. Zurich did not have a formal review process until 2016. AMP did not have a formal review process until 2017. TAL only started reviewing medical definitions annually in 2016.
AMP, Westpac Onepath and MLC say they now review definitions every 12 months, while AIA, Zurich, and CMLA will review their definitions at least every three years.
CommInsure said it had not identified any problems with its review process, other than failing to its update its definition of what constituted a heart attack.
On Thursday, the leader of the Greens, Richard Di Natale, called on the federal government to ban lobbyists representing the financial services sector from Parliament House until the conclusion of the royal commission.
Di Natale wrote to the Speaker of the House and President of the Senate, who have authority to suspend or cancel sponsored passes, asking them to revoke the passes of lobbyists until the commission had concluded.
“It is completely inappropriate for lobbyists for the big banks, super industry and other financial services to be lobbying behind closed doors the very same politicians who will be deciding whether or not to extend or broaden the scope of the royal commission and, of course, ultimately whether or not to implement its recommendations,” Di Natale said.
“Obviously we need wholesale donations reforms if we are going to tackle corruption and restore faith in our democracy and our major financial institutions.
“But in the short term, this is a concrete, common sense step that we can take to restore a measure of faith that decisions are being made for ordinary Australians, not just the corporations that donate the most money to the two old parties,” he said.
