Concealing facts could cost you insurance compensation

When policyholders present claim forms, some insurers develop ‘cold feet’ and start looking for unintentional blunder in the cover documents to discredit the application. Photo/FILE 

By JOHN NJIRU

In Summary

• Many insurance companies capitalise on your omission of certain information to reject your claim

When Joy’s family visited a local insurance company to report the death of their daughter, they believed that her funeral benefits would be paid in time and the hospital bill sorted out. However, this was not to be.

The policy seller said the deceased had omitted some “vital” information upon filling the insurance application form and was, therefore, not entitled to compensation.

Her elderly parents were shocked. Not long before that, their daughter had told them that she had taken the cover and that she had appointed them her next of kin.

She had paid the premiums on time, a fact that the insurer did not dispute. However, her family could not claim her investment because she had omitted crucial details on her health.

At the time she applied for the medical cover in 2009, Joy was suffering from lupus, which had plagued her since childhood, but she did not indicate this in the form.

The underwriter declined to pay the claim, saying Joy had failed to answer a question correctly — whether she often felt faint during her daily activities.

Lupus is an autoimmune complication where the body’s immune system becomes hyperactive and attacks normal body tissues.

Apparently, the omission of the answer to the question had invited such “grave” consequences, according to the insurer, that no reimbursements would be released.

However, after a series of court cases and exchange of demand letters, the insurer was pushed to release the funds, albeit late, to the mourning family.

This situation is a reflection of the realities that a number of insurance consumers grapple with when seeking cover claims despite having faithfully paid their premiums.

Blueprint blunder

Quite often, insurance companies develop cold feet when consumers present compensation claims.

They diligently scour the application form for an “error” or intentional blueprint blunder to discredit years of premium payments already safely in their coffers from their clients.

Some even have no qualms trying to make the consumer look bad and guilty.

Consumers have now been asked to do the only thing at their disposal and compel the “cold feet” insurers to pay up by fighting for what is rightfully theirs.

Medical insurance companies and their motor vehicle counterparts are the most notorious. At best, they delay payments, hoping that the customer will give up and abandon the claim.

The number of complaints the insurance regulator received last year rose compared to previous years, largely driven by claims disputes.

The Insurance Regulatory Authority (IRA) says that by the end of August 2012, it had received 492 complaints, a sign that consumers are increasingly understanding the importance of reporting abnormalities on claims settlement.

There were 554 complaints in 2011, 633 in 2010, and 744 policy holders who felt disgruntled with the services of their insurers and reported their woes.

“These complaints have created a perception that has led to a credibility crisis affecting the uptake of insurance products and affected the growth of the industry,” said IRA’s chief executive Sammy Makove.

The most frequent complaints reported were delayed or non-settlement of claims where policy holders say the insurer has not paid their claims as expected.

Other complaints include delays in payment of maturity benefits, lack of help at the insurer’s branch offices, delays in issuance of stop orders to employers, and erroneous deductions of premiums.

But insurers, especially in the medical field, have insisted that consumers, with the connivance of medical personnel, have devised ways of fleecing them by filing fake claims.

To counter this, medical insurers have introduced smart cards with the biometric details of the customer as a way of cushioning themselves from the increasing fraud.

This aims to ensure that only the customer with matching details receives treatment from specified medical centres.

But even this method is not foolproof because of the well-coordinated collaboration between doctors and clients.

The “insensitive” levels of coordinated fraudulent activities between consumers and hospitals have consequently led to medical insurance companies delaying payment of claims as they seek to authenticate them.

Consumers are now being advised to prepare for a battle in filing claims.

Read the fine print

An insurance agent can simply reject your claim on grounds of technicalities; you failed to disclose something, or did not read this statement, or this is what you should have answered before signing the form, the insurer could claim.

It does not matter if the error is of little significance to the details of the claim, the insurer can make it stand out, then use it to refuse to pay.

To be on the safe side, ensure that you have read and understood all the fine details in an insurance cover document. It would also be wise to consult an expert before you sign on that dotted line.

Unending delays

This is one of the most widely employed tactics by insurers. One may be tempted to ask: “Are they waiting for my death to release the funds?”

Insurance companies are known to open files months after claims have been filed, resulting in unnecessary delays.

Perhaps they hope that the consumer will give up chasing the compensation and drop the matter altogether. This is common for pension payments, which sometimes take years.

Extra Costs

Have you ever heard of the word “excess”? This is a common reference in the motor insurance industry. The motor cover offers protection against financial loss, physical damage, injury, and liability.

Motor insurance excess is the percentage of the damages that the consumer is required to pay.

If the customer has an excess of say Sh43,000 and the total repair costs of the car stand at Sh258,000, then the consumer will be required to pay Sh43,000 and the insurer Sh215,000.

The underwriter imposes this fee as a form of co-insurance to force the owner to be more careful with the vehicle.