Why insurance application forms are never 'simple' and are never the end of the matter

Why insurance application forms are never 'simple' and are never the end of the matter

Andrew HookerBy Andrew Hooker

When you apply for an insurance policy, the insurance company usually asks a number of questions and on that basis decides whether to insure you.

This “underwriting” is completed before the insurance company agrees to insure you.  

Once the insurance company issues the policy, most people believe that their insurance is safe. 

What many people don’t realise is that it is not until claims time that the insurance company will often conduct more detailed investigations to find out if you have told them everything that they need to know. 

Claims time is "moment of truth" in the relationship between you and your insurance company, and of course if any issues arise in relation to your policy, it is too late then to address them.

The type of things that insurance companies will often do once you make a claim is:
(1) demand that you complete a disclosure form so that they can check with the Ministry of Justice about any convictions that you might have;
(2) in the case of medical or life insurance demand that you provide access to all medical records dating back as many years as the insurance company thinks appropriate;
(3) check on the Insurance Claims Register, a database operated by the Insurance Council, to see whether you have had any previous claims.

Of course, all of these resources are easily available to the insurance company before they issue the insurance, but very few insurance companies ever bother checking. 

They simply provide you with a relatively simple “tick box” application form, or even ask a few questions over the phone, and then issue the policy. 

If you forget something, or make a mistake, or even misunderstand a question, you will never know that your insurance is invalid until many years later when you make a claim. 

In relation to medical, income and life insurance policies, the application forms and processes can also be very technical and difficult to understand. 

There are numerous fishhooks and traps for young players. 

These can be categorised into three categories:
(1) the questions that no one can understand because the terms are so technical that you would need a medical degree to answer them;
(2) the questions that end with “or any other condition”;
(3) the questions that no one could every answer “no” such as – “have you in the last five years visited a doctor or obtained medical advice”.

It is these questions that come back and cause problems at claims time.  

Often the insurance company will request your entire file including clinical notes from your general practitioner and carefully analyse them to see if there is anything that you didn’t disclose. 

Lo and behold, when you visited your doctor eight years ago telling him or her that you were feeling a bit down, the doctor recorded this as “being depressed”. 

The insurance company then says that you failed to disclose a history of depression and refuse your claim.  (This is an actual case)

The days of insurance companies relying on these technicalities or tactics are drawing to a close. 

To be fair, many reputable insurance companies would not usually act in this way. 

Legislation like the Fair Trading Act, the Consumer Guarantees Act and industry Codes of Practice are making it more difficult for insurance companies to escape on such technicalities but it still happens regularly and there is a surprisingly close correlation between the size of the claim and the likelihood of any insurance company hunting for non-disclosures.

What can you do to protect yourself?

Think about inviting your insurance company during the application process to contact your doctor to obtain a copy of your file upfront. 

There is no reason why an insurance company can’t check the Insurance Claims Register or contact your previous insurance companies before accepting your application, and if you invite them to do so, then they cannot complain at the end if you have made any mistakes or if there are any oversights. 

The insurance company may not like it when you ask them to do the work upfront. 

But if they won’t then you need to ask how committed the insurance company is to a transparent and open application process.

Insurance can be a complex minefield for the uninitiated. 

But if you make sure that the insurance company does its job up front, that may reduce the risk of "standing on a landmine" at claims time.


Andrew Hooker is a partner in the North Shore law firm Turner Hopkins and a director of Claims Information Specialists Ltd, running an insurance information web site www.claimsinformationspecialists.co.nz


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How can I find out what information may be held on the claims register.

I am insured with AMI, who are not involved with the register, and an approach to State for a quote to switch insurances, and a request to access the register was met with a refusal. They were happy to provide insurance cover but said that they would only check the register if a claim was made. I had some problems 24 years ago which resulted in a criminal conviction, which has subsequently been wiped under the clean slate provision. I want to be absolutely sure that if this information is held on the register, and if I needed to make a claim,  that my Insurance company  would not refuse to pay out based on failure to disclose that information at the time the Insurance was taken out.

New insurance company market practices are so corrupt that it is dangerous to your life to rely on insurance in NZ.

I have worked on a project for two decades and have evidence of insurance company market practices being so poor that it proves there is no good faith, no meeting policyholder expectations, no treating customer fairly, and so on....these are simply words and systems the industry set up to pull the wool over the eyes of regulators.

How bad is it - well the project has evidence of insurance company malpractices that includes false documents, forged signatures, fake policy replacement documents, and its all done with such expertise that not even lawyers notice it - not even Andrew Hooker who wants legal fees to turn a page before helping in the public interest.

The insurance industry is another Enron II waiting to happen.

Hi friend,
I know it has been nearly a year since your post, but I am in an unfair non-disclosure battle with my insurance company (Kiwi Insurance - actually CIGNA) over information I was unaware of. As I have limited time I would really appreciate it if I could use the information you have gathered to help me in my battle. Is this possibe? I would really appreciate your support!