Insurance Ombudsman: Not so fast, AIG

The Insurance Ombudsman took insurer AIG to task after it required a woman who was treated for cellulitis to provide proof it was not because of diabetes, which makes patients more susceptible to cellulitis. The policy excludes treatment for diabetes.

According to the annual report of the Insurance Ombudsman, AIG Life South Africa relied on the policy provisions that no benefit would be payable if an insured event is as a result of, by, for or from diabetes and that and that the consumer must provide all supporting documentation at her own expense within 180 days.

ALSO READ: Credit life insurance: 5 million do not know they even have it

AIG then challenged the office’s provisional ruling in favour of the consumer.

“Our policy wording is clear around the onus of proof and the claims conditions refer to an insured providing all documentation at the insured’s cost. In this instance the insured is a known diabetic who was treated for cellulitis. We identify medically the causal link between diabetes and cellulitis,” AIG said.

It also pointed out that the company did not formally reject the claim in order to give the consumer the opportunity to provide supporting clinical evidence that her admission was due to other conditions not related to diabetes.

However, the adjudicators at the office of the long-term insurance ombudsman said the evidence showed the consumer was admitted and hospitalised for cellulitis and that her claim fell within the scope of insurance. AIG has not said at any stage that the claim did not fall within the scope of insurance.

The adjudicators said if AIG wished to rely on the diabetes exclusion, it had to obtain the evidence necessary to prove that the hospitalisation was “as a result of, by, for or from” diabetes and the company cannot ask the consumer to provide that evidence.

ALSO READ: Covid-19: A new environment for insurers and claimants

The adjudicators pointed out that it appears that AIG may be under the misconceptions that the clause in the policy under Claim Conditions means that the insured has to provide any documents the insurer requests. However, they found that the clause only covers the claimant’s duty to prove the claim and the documents to support the claims, which she had done.

“That clause cannot and does not shift the onus. The onus of proving that it can rely on the exclusion rests on the insurer,” they said, adding that “AIG appears to view the diabetes exclusion as having a wider reach than what it states”.

According to the adjudicators, diabetes must be the direct cause of the hospitalisation for the clause to become operative.

“The fact that diabetes is a condition from which the claimant suffers is not sufficient. Even if it is accepted that a claimant is more susceptible to cellulitis because of diabetes, that will not entitle AIG to rely on the exclusion if the hospitalisation was not as a result of, by, for or from diabetes.”

They said the fact that the complainant is a “known diabetic who was treated for cellulitis” was not sufficient to discharge that onus. “AIG has not made out a prima facie case that the complainant was hospitalised as a result of, by, for or from diabetes. The documentation reflects that she was hospitalised as a result of, by or for cellulitis.”

ALSO READ: Insurance Ombudsman puts R300 million back into consumers’ pockets

The adjudicators agreed that the fact that the consumer had an underlying condition of diabetes did not bring her within the exclusion clause. Given the delays that the consumer experienced, the ombudsman gave AIG 30 days to obtain information and make its claim decision known or pay the claim.