Ella’s insurer rejected her hospitalisation claim on the grounds of misrepresentation, as she failed to disclose a medical history of bronchial asthma since childhood in the Proposal Form. The insurer contended that Ella should have disclosed her medical condition in the following question:

Health Declaration Question 1:

Do you suffer from cancer, tumour or cyst, diabetes, heart disease or disorder of the blood vessels and circulation (diseases that affecting the blood vessel system, arteries, veins, capillaries and blood cells, platelets, plasma and its constituents), diseases diagnosed since childhood or disorders of the bone, joint or muscles?

OUR FINDINGS

According to Schedule 9 of the FSA 2013, the insurer must ask clear and accurate questions in the Proposal Form to obtain the exact information required for underwriting purposes.

We observed that the insurer’s Proposal Form did not contain specific questions that required Ella to disclose her bronchial asthma but only inquired about ‘diseases diagnosed since childhood’.  We believe such questions are general and should only be asked over and above the list of specific questions. Otherwise, an insured is entitled to take the questions an insurer poses in a proposal form at their face value.

Since there were no specific questions regarding bronchial asthma, Ella’s obligation to disclose the information was restricted. She was not obliged to provide the details but was expected to exercise reasonable care when responding to specific questions from the insurer.

In the precedent case of Roberts v. Plaisted (1989) 2 Lloyd’s Rep. 341, the court held that when a question in a proposal form is framed in such a manner as to give an insurer all the information he requires, it may limit an insured’s duty of disclosure.

Considering the above factors and the insurer’s failure to adhere to the criteria outlined in Paragraph 5 of the Financial Services Act 2013, the insured’s misrepresentation could not serve as a valid reason for the insurer to evade liability.

OUTCOME

Our recommendation is that the insurer reimburse the medical expenses incurred for the admission and reinstate the policy to its original terms. The insurer revised its decision, reinstated the policy, and paid the claim.