Stake You Claim
The Age
Friday April 28, 1995
How to make travel insurance work for you.
AMANDA McMAHON was hiking in the Himalayas when a farmer with his buffalo passed her. The buffalo came back and gouged her in the leg.
She was knocked to the ground, with flesh and blood everywhere. While on the ground, her watch was ripped off my arm and stolen.
``The farmer began pulling my hair and screaming at me, indicating that my red hair had upset his buffalo. I called to a boy to take me across the lake in his canoe. On the way to hospital, the taxi crashed and knocked a cyclist off his bike. The driver chased me into the operating theatre trying to get money for the blood on his car.
``I made sure I got copies of all medical records, including a letter from a Canadian doctor in Katmandu stating I needed to return to Australia (as my leg had become infected).
``My insurance company refused my claim for medical costs and airfare, saying I did not have enough evidence to show it was imperative I return home," Amanda says. ``I needed written reports from the Nepalese mountain people who witnessed the accident (and they probably don't even write!)."
It's fairly obvious that, if you have an accident overseas, you should get a local doctor's report as proof to your travel insurer.
Amanda found she needed more an impossible amount more. There are many ways you can lose medical cover, but travellers often find the support they hoped for.
``Unfortunately, I suffered a heart attack whilst in India. I was unable, in several instances, to substantiate some items of my claim as I had not received receipts. However, my insurer said not to worry . . . and some two to three days later, the claim was paid in full without question. The insurer also rang my wife in India on two occasions to see how I was progressing and to inquire if there was anything further they could do to help."
We asked readers to write to The Age citing their experience with travel insurance medical claims. It's difficult to reconcile the conduct that makes one claim successful and another fail. The most recent annual report of the General Insurance Claims Review Panel (1993) draws this inauspicious conclusion: ``Several aspects of travel insurance trouble the Panels. Many of the policies are so seriously qualified in their coverage that it is doubtful that the insured obtains much benefit for the premium."
We'll take a look at where consumers and insurers go wrong, focusing on health issues. Many of the names used in this article are real but, in some cases, where negotiations are continuing with insurers, we have respected their requests for confidentiality and have used substitute names. Out of fairness, we have also deleted names of insurance companies from the case studies, as the sample size was insufficient to justify either public reward or condemnation.
There's money in insurance.
FIGURES are hard to come by, but Bob Gibson, the general manager of the travel agents' industry insurer AFTA Travel Insurance, believes that more Australians are taking out travel insurance. ``It may be as high as 70 per cent or 75 per cent outbound, and up to 10 per cent domestic," he says.
In fact, total travel insurance premiums for 1993 approached $110 million. Consumers recovered $73 million of this in claims, according to the Insurance and Superannuation Commission.
What is covered?
TRAVEL insurance is covered by the Commonwealth Insurance Contracts Act of 1984, which sets out minimum standards of cover.
In essence, you can expect your policy to reimburse you for overseas medical, hospital, ambulance and nursing home costs as well as emergency dental treatment. If illness or injury causes you to miss flights or cancel tours and accommodation, your insurer should cover these expenses too. There are standard exclusions like suicide, self- inflicted injury and the consequences of using alcohol or drugs.
Many insurers recognise that people can still travel safely despite continuing medical conditions or old age. With a doctor's declaration as to your fitness to travel (and payment of higher premium), it may still be possible to insure.
Pre-existing medical conditions.
THE number one question is: what must you tell your insurer? ``Before a contract of insurance is entered into, the intending insured has a duty of disclosure. It is a general principle of disclosure that you only have to disclose what you know," says Peter Mann, insurance law solicitor and author of the Annotated Insurance Contracts Act. ``The duty of disclosure requires the intending insured to disclose matters known to the insured and which the insured also knows (or a reasonable person in the circumstances could be expected to know) are relevant to the insurer in assessing the proposal for insurance.
``For the insurer to have a remedy in respect of a breach of the duty of disclosure, it must show the medical condition was a relevant matter and that it would have acted differently had it been aware of the matter."
Policies define a pre-existing medical condition as one that requires medical advice or treatment (including medication) from a specialist or qualified medical practitioner during the three months prior to the issue of the policy, or a condition you suspected could lead to a disruption of your journey.
Major illness and operations should be disclosed, but you probably don't have to reveal minor ailments like a sore throat or occasional headaches.
In insurance cases, courts have found these matters material for disclosure: asthma, treatment for a drug overdose, a doctor's opinion that the insured had kidney disease, even though contradicted by another doctor, and a back abnormality.
``We like to bring the problem up-front in our policy," says Branko Dedich, general manager for travel claims with Mercantile Mutual Insurance (the underwriter for several policies), ``by granting cover for many pre-existing conditions." For example, there may be a special form to fill in.
Just whose pre-existing condition is relevant?
WHAT about the health of those staying at home?
``My travel agent knew my father had been ill with cancer for years (15 in fact). I told her to make sure everything was open for changes in tickets, etc, if necessary," says Meryl Cook. ``As it turned out, we did have to come home early and my father died a week later. My insurance company rejected my claim (for flights and cancelled accommodation) on the grounds it was a pre-existing condition, yet my father was not a party to the contract.
``Are we expected to make inquiry as to the health of relatives prior to travelling?" asks Meryl Cook.
In short, no. ``The problem is the law is written as though the insured can look into the mind of the insurer and tell them what they need to know. The prudent thing is to err on the side of caution," says David Curtain, QC, a leading insurance barrister and member of the Bar Council. ``But I don't think there is a positive duty to make inquiries of relatives and business associates."
If you search the fine print you'll find, typically, that the policy will not cover you for a pre-existing condition of a relative or business associate. However, as is so often the case with insurance matters, one reader gave us a situation where the rule was reversed.
On returning early to Australia, following the death of her father, the Meryl Cook's claim for expenses was rejected. She faxed the managing director no reply. Next day, she faxed to say she was reporting the matter to the newspapers no reply. The next day, she faxed to say she was telling The Investigators television program and the insurer paid up!
An incomplete answer.
WHAT happens if you leave the ``pre-existing medical condition" question blank on the insurance proposal form?
Failure to answer, or the giving of an ``obviously incomplete or irrelevant answer" to a question on the proposal form throws the ball back into the insurer's court. It must pick this up and get back to you. If it doesn't, ``the insurer shall be deemed to have waived compliance with the duty of disclosure in relation to the matter" (section 21, Insurance Contracts Act).
The law punishes the slack insurance company. It is a useful thing to know.
Delay by the insurer.
WHILE in Eritrea, Tim, according to his fiancee Jean, hopped off his motorbike to take a photograph and walked off the road and stood on what was assume to be an anti-personnel mine. The injuries sustained were the loss of his right foot, his jaw shattered and serious wounds to his left arm."
Tim was in a stable condition but required evacuation. Jean contacted the travel insurer, which initially said it wouldn't cover the claim as there had been civil war (an exclusion under the policy) in Eritrea.
After a tense day of negotiations, the insurer finally accepted the claim, but, due to transport difficulties, it took nine days to get Tim home. ``Tim's condition was reasonable but infection had set in and it was necessary for further amputation," says Jean. ``This was not helped by the delayed return. The pressure I had to exert, and the threat of legal action, should not have been necessary."
Delay by the insured.
BUT if the delay or communication breakdown can be blamed on the insured, don't be surprised if the insurance company seizes the point.
Mrs Kleerkoper was in Amsterdam when she came down with severe back pain. She sought medical attention and missed her connecting flight to Tel Aviv. She bought new tickets and completed this leg of her journey, finally reporting the matter to her travel insurer more than a week later. According to Mrs Kleerkoper, her insurer protested that her delay deprived it of the opportunity to manage the claim. ``It was a reason for the insurance company to cut the total amount of my claim in half! The logic of which escapes me to this day."
And she may be right in her suspicions. ``Delay can only be cited as a reason for refusing a claim where the delay has prejudiced the insurer," says Alan Mason, deputy chief executive of the Insurance Council of Australia. ``If not, the insurer should pay."
Will Medicare help pay the bills?
ACCORDING to the Australian Health Insurance Association, most private health insurers will cover their members for hospitalisation and medical expenses overseas ``to the level you would be covered in Australia for the same treatment". Obviously there will be a significant shortfall in many European and North American countries.
As a rule, Medicare doesn't cover medical expenses overseas. The Health Insurance Commission confirms that Australia has bilateral arrangements with Finland, Italy, Malta, the Netherlands, New Zealand, Sweden and the UK. In those countries, you'll get to use the local public health system free of charge but will that be good enough?
Nick Davies left the UK to work for a few months in Australia. While in Melbourne, Nick was diagnosed as having a large tumor in his thyroid gland. ``My surgeon said I would wait three to six months for the operation as a public patient, or he could do it `on Monday' as a private patient. My UK travel insurer said to `use Medicare'.
``It was only because I pushed that I got covered (privately)," Nick says.
We need better policy documents.
SEVERAL letters we received showed that consumers had mistaken beliefs about what their travel insurance would cover.
``One of the problems is the way travel insurance is sold," says Alan Mason of the Insurance Council of Australia. ``It fits into the style of document used by the travel industry chequebook-sized, designed to fit into a travel wallet with your air tickets. Yet it's complicated, combining four or five different insurance policies in one: there's baggage, cancellation, medical, and so on."
If you look at the typical insurance proposal, there is little space for a detailed response to the questions, or to fulfil your far- reaching disclosure obligations.
Did the travel agent explain?
SHOULD the travel agent help explain the policy?
The industry says yes but, as this excerpt from the last annual report of the General Insurance Claims Review Panel shows, there is concern.
``Most travel insurance is sold by travel agents, some of whom do not appear to be well trained in the intricacies of insurance. They see the travel policy as just another add-on expense of the trip and their lack of familiarity with the product and its limitations may be the cause of difficulties both to the insured and the insurer . . .
The Panels do discern a tendency by travel agents' staff to gloss over the limitations of policies."
There are moves afoot. Under a new insurance industry code of practice (to come into force over the 12 months commencing 1 July this year), ``Insurers shall express policy documentation in plain language, and design and present policy documentation with the aim to assist comprehension by consumers."
The code requires agents to be properly trained to understand the explain insurance policies to customers, says Bob Gibson, of AFTA Travel Insurance. ``The days of the glossy brochure with bright colors and benefits on one side and difficult-to-read conditions on the other will soon be over."
Who needs it?
GIVEN the hassles, you may wonder if you really need travel insurance.
``Globally, around 10 per cent of travellers outside their own countries will use medical attention," says travel medicine doctor Robert Grenfell, quoting World Health Organisation information. ``And an estimated 70 people per 100,000 will need air evacuation."
To minimise the risks of losing cover, follow the tips from our case studies: Bring any pre-existing medical condition to the attention of your travel agent and insurance company in writing.
Read the policies and check the medical benefits see Key Words For Your Travel Insurance Policy, on page ??
Report immediately there is a problem.
Create a documentary trail and bring the reports, x-rays and witness statements home with you.
Be prepared to assert yourself, and badger your insurer with fresh information.
We'd like to thank all those who sent in details of their experiences with travel insurance it was much appreciated.
Peter Cerexhe is a lawyer and journalist who specialises in consumer and tourism issues.
HOW TO DRIVE YOUR COMPLAINT FURTHER.
``In my experience," says Melbourne solicitor Andrew Romer, a travel law specialist, ``in the midst of a crisis, if the insurer accepts the claim, it will be very helpful. But if indemnity is denied, you can expect the insurance company to argue its case hard. Individuals with limited means find it too expensive to fight."
There are alternatives to court. The Insurance Enquiries Council (03 629 4109) runs a scheme to deal with complaints involving its member companies up to a ceiling of $100,000. It's a free service, but can take between three and four months from start to finish.
``The decision is binding on the insurer, but not on the consumer, who can pursue other legal remedies," says Sam Parrino, general manager of the IEC.
In 1993-94, 5200 complaints came to the IEC and of these 500 went on to the panel (around 13 per cent involved travel insurance).
``Outcomes are currently running at 55 per cent in favor of the consumer and 45 per cent for the insurer," says Sam Parrino.
Alternatively, the Small Claims Tribunal (03 602 8204) can deal with your travel insurance dispute up to an amount of $5000, upon payment of a $10 application fee. It generally takes four to six weeks to obtain a decision. There are no lawyers, so you present your own argument.
It's a course of action sadly under-used. ``We wouldn't have handled more than 10 travel insurance complaints in the last two years," says tribunal registrar, Jim Nelms.
KEY WORDS FOR YOUR POLICY.
THERE seems to be a trend for travel agents to display only a single brand of travel insurance. Yet there are differences in benefits and exclusions it's worth getting hold of several policies.
Think about your situation first, so you can check that your needs are covered. Look for these key areas of medical cover: Evacuation or repatriation to Australia.
Costs of a friend or doctor to fly over and remain with you in hospital or escort you back to Australia.
A 24-hour emergency assistance phone number (reverse charges).
Cover for expenses of returning to Australia (and other cancellation fees) upon the death or disablement (illness or injury) of your travelling companion, or a close business associate, or your or your travelling companion's relative. ``Resumption of journey" if you return to Australia due to death or illness of a relative.
Your planned sports or activities. (Even playing a social game of football can fall foul of some policies; resort sports such as parasailing are not generally covered.) If you're having difficulties getting travel insurance, you could try contacting an insurance broker to put together a special policy for you.
© 1995 The Age
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