AFCA has ruled in favour of Nippon Life Insurance in a dispute with a client over income protection (IP) offsets, confirming an almost $18,000 overpayment, and supporting the suspension of benefits while compulsory third party (CTP) income was reconciled.<\/p>\n
The case centred on a self-employed carpenter who claimed IP benefits following a not-at-fault motor vehicle accident in October 2024. While the insurer accepted the claim and began monthly payments of $3,728, it later discovered the claimant was also receiving weekly income-replacement benefits under a CTP scheme.<\/p>\n
Once those payments were verified, the insurer recalculated the claim in line with policy terms, applying both the monthly benefit limit and the income replacement ratio, and determined it had overpaid $17,907 up to 6 September 2025. AFCA agreed, finding the insurer had correctly applied the policy\u2019s ‘benefits from another source’ clause.<\/p>\n
…it was reasonable for the insurer to suspend benefits…<\/p><\/blockquote>\n
The complainant argued for an annualised assessment, stating the insurer owed him money once gaps in income were factored in. However, AFCA backed the insurer\u2019s month-by-month calculation, confirming that both ongoing and lump-sum CTP payments must be apportioned and offset in accordance with the policy terms.<\/p>\n
AFCA also found it was reasonable for the insurer to suspend benefits in May 2025 while awaiting confirmation of CTP remittances, noting that continuing payments would likely have increased the claimant\u2019s repayment liability.<\/p>\n
The authority declined to award compensation for non-financial loss, finding the insurer had not mishandled the claim overall.<\/p>\n
AFCA directed that once final CTP payment details are confirmed, the insurer must finalise the overpayment position, reassess any ongoing IP entitlement, and offer a reasonable repayment arrangement, including instalments aligned to the claimant\u2019s financial capacity.<\/p>\n