Forum: Insurance claims should not be denied on technicalities

I refer to the reply by the Life Insurance Association (LIA) to Ms Denise Ho Shi Yi, whose insurer denied her claim for breast cancer because she did not declare that she had vertigo and asthma (Policyholders making claims have avenues for recourse, July 26).

LIA said that "applicants are bound by good faith to answer all questions in the application form truthfully and honestly".

It is not uncommon for people to unwittingly omit information in application forms, so how does one prove that the omission was truthful and honest or otherwise?

Surely that assessment should be made against any link between the omitted information and the subject matter of the claim?

So wouldn't the relevant question in Ms Ho's case be whether the omission of her vertigo and asthma had any causal link to her breast cancer?

LIA said that "life insurance companies are also responsible for showing that the undisclosed fact was a known fact which the applicant could reasonably be expected to disclose".

This is not helpful to consumers, as wouldn't all inadvertent omissions be facts "which the applicant could reasonably be expected to disclose"?

For many people, setting aside a fraction of their monthly income for insurance premiums buys them a little lifeline when they are hit with a medical crisis.

Insurers should be trusted to honour their obligations and not deny claims on technicalities such as a failure to disclose information that is unrelated to the subject matter of the claim.

LIA's reference to the Financial Industry Disputes Resolution Centre (Fidrec) is unhelpful, as Fidrec has a claims cap of up to only $100,000 and disallows the involvement of lawyers.

LIA's advice to policyholders that they may explore legal action against the insurer is equally unhelpful since many victims in such scenarios would hardly have any money for their medical treatment, let alone for legal expenses.

Consumers spend their hard-earned income on insurance premiums. Insurers should honour their obligations instead of making their insured suffer the ordeal of legal recourse.

Chia Boon Teck