AFCA has ruled in favour of a policyholder in a dispute over the interpretation of a trauma insurance definition, finding that the insurer’s osteoporosis benefit definition was ambiguous and should be interpreted in favour of the insured.
The complaint concerned a critical illness policy held since 2010. The policyholder lodged a claim in January 2025 for severe osteoporosis, a condition covered under the policy’s female-specific trauma benefits.
The insurer, TAL declined the claim in March 2025, arguing that while the claimant met the required bone mineral density threshold, she did not satisfy additional fracture requirements contained within the policy definition.
At issue was the wording of the policy’s definition of “severe osteoporosis”. The firm argued that the definition required both a qualifying bone mineral density result and evidence of specified fractures before a benefit could be paid.
AFCA found the policy definition was capable of more than one reasonable interpretation…
The complainant contended that the wording could reasonably be interpreted as providing alternative methods of establishing the condition, including through qualifying DEXA [bone density] scan results alone.
In its determination, AFCA found the policy definition was capable of more than one reasonable interpretation.
The authority said the wording did not clearly establish whether the fracture requirements applied to both DEXA and quantitative CT scanning pathways, or only to the CT scanning pathway.
AFCA said the use of the word “or” between the two scanning methods created ambiguity and that a reasonable insured could interpret the definition as allowing a claim to be established through qualifying DEXA scan results without also meeting the fracture criteria.
AFCA concluded that the complainant satisfied the relevant policy definition and was entitled to payment of the critical illness benefit.
The authority directed TAL to approve, calculate and pay the benefit, and to pay interest calculated from 20 March 2025, the date the claim was declined, until the date payment is made.
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