An AFCA ruling against Nippon Life Insurance has highlighted how older policy definitions can determine the outcome of modern critical illness claims, in a decision likely to interest advisers managing legacy IP and trauma portfolios.
Members of the authority found the insurer wrongly rejected a claim from a policyholder who suffered a cardiac event in October 2022 and later sought payment under a critical condition benefit attached to his IP policy.
The policy, originally issued in 2003, provided a six-month IP payment if the insured suffered certain defined medical conditions, including “heart attack”.
The insurer declined the claim in May 2023, arguing the medical evidence did not satisfy the policy definition. AFCA overturned the decision, finding the complainant met a more favourable 2008 wording that applied to the contract following policy upgrades over time.
The ombudsman said the claimant had demonstrated “myocardial infarction, new changes on electrocardiogram and raised troponins (heart attack biomarkers)” consistent with the applicable definition of heart attack.
…the insurer had relied in part on a stricter 2021 definition…That did not apply to the complainant’s cover…
Central to the dispute was whether the claimant’s condition amounted to myocardial infarction or merely myocardial injury. The insurer relied heavily on the absence of obstructive coronary artery disease and later recovery of heart function, arguing there was insufficient evidence of severe heart muscle damage.
AFCA rejected that position, saying the insurer had relied in part on a stricter 2021 definition requiring “severe heart muscle damage”, wording that did not apply to the complainant’s cover.
the determination points to the importance of reviewing historic policy definitions…
The authority instead accepted later evidence from the treating cardiologist, who clarified that ECG testing performed during the hospital admission showed lateral T-wave inversion consistent with myocardial ischaemia (reduced blood flow to the heart).
The determination points to the importance of reviewing historic policy definitions when assessing declined claims, particularly where contracts have been upgraded or reissued over many years.
In addition to paying the claim, AFCA ordered the insurer to pay interest under section 57 of the Insurance Contracts Act, finding it became unreasonable to withhold payment after additional ECG tracings and clinical material were supplied in January 2026.
Click here for the full ruling.
For many years I had arguments with my fellow advisers At product presentations over the importance of the fine print in trauma definitions, particularly stroke. I felt like a bit of a bit of a lone wolf. I argued that Trauma definitions were definitely not "all the same", a philosophy imbued in me by Col Fullagar
When BDM's would present me with so-called updated trauma definitions, I often argued with them that the so-called improved definitions were actually more severe than the existing definition.It was all spin and BS, with insurers trying to retain market share, and of course maintain shareholder value.Sadly many of my colleagues never asked pointed questions
At long last we have an AFCA case where clearly the so-callled "improved " definition It is proven to have introduced more severity to the policyholder's existing definition.
I'm yet to read the full AFCA determination but I'm sure I will find a reference in there to the negligence of the claims people who sought to change the outcome of the claim by seizing on a later change to a definition in order to reject the claim.
As the judge said in the famous case of Couper V CBA, "You, Mr adviser, are the expert, not your client"
Some of my former Risk colleagues need to update and become better subject experts
Comments are closed.