Life insurers have been reminded of their obligations when notifying applicants that cover has been declined.
The Life Code Compliance Committee issued the reminder following a “significant breach” involving hundreds of life policy applicants by an un-named insurer.
The committee says the Life Insurance Code of Practice requires insurers to clearly explain adverse underwriting decisions, the reasons for them, and advise applicants of their options, including the right to request a review.
The reminder follows a case in which an insurer relied primarily on telephone contact to notify applicants their applications had been declined. Applicants who missed calls received a voicemail and text message asking them to return the call, but neither disclosed the insurer’s decision.
The committee found that many applicants were unaware of their review rights or the option to provide additional information.
The committee says relying solely on unsuccessful phone contact is not sufficient to meet an insurer’s obligation to notify an applicant.
“We expect insurers to take reasonable steps to ensure applicants receive notice of the outcome of their application,” stated the committee.
