CR199 Non-disclosure – whether the insured disclosed sufficient
• Non-disclosure – whether the insured disclosed sufficient information to have complied with his duty of disclosure
The insured, 57 years old at the time, was the life insured under two policies which the insurer purported to cancel, retaining all premiums paid, on the grounds of non-disclosure,.
The policies were initially taken out for purposes of business in 1998 and 1999 respectively. Both policies had back exclusions and were subsequently ceded to the insured.
The insured was diagnosed with Parkinson’s disease in 2000. He continued working in a reduced capacity until 2003 but because of his inability, due to the disease, to perform his occupation as a strategic planner in marketing, he instituted a claim for a disability benefit in 2004.
The insurer refused the claim and cancelled both policies. The stated reason was the non-disclosure of a visit the insured had recently made to a neurologist, after he experienced back and neck problems and tremors in his hand. The neurologist had sent the insured for scans and x-rays and also suggested urine and blood tests. He prescribed a course of physiotherapy which in the insured’s own view and that of the physiotherapist was successful. For that reason the insured had not returned to the neurologist and had also not arranged for the suggested urine and blood tests.
The neurologist at claim stage mentioned that he had suspected early Parkinson’s disease but had not advised the insured of this suspicion at the time. In this regard a note submitted by the neurologist after enquiries by our office stated that there had been “diminished arm swing on the right and tremor quite prominent with walking. The features suggest early Parkinson’s and to investigate fully with regard to onset of Parkinson’s at such a young age.”
On both application forms the insured had disclosed that he suffered from neck and back problems. He completed a back questionnaire on the first application. In it he disclosed that he had seen a physiotherapist and received treatment for the problem. But he omitted to mention the visit to the neurologist nor had he disclosed the tremors in his hand.
At the time of the second application the broker sent a letter to the chief underwriter of the insurer in which it is disclosed that the insured’s “stiff neck” might in fact be stress-related.
It was as a result of the disclosures about these problems that the back exclusions were imposed on the policies.
The insured submitted several affidavits from friends and business associates in support of his assertion that he was completely unaware at the time that he manifested the symptoms of early Parkinson’s disease. If he had been so aware, so he said, he would not have left his fixed employment in an advertising agency at a high level in order to start his own business in 1999.
The pertinent issue was whether the non-disclosures of the visit to the neurologist and the tremors warranted the repudiation of the policies, having regard to the positive disclosures made by the insured.
After considerable debate in our office and after seeking an opinion from an outside medical expert, our office came to the conclusion that the insurer’s repudiation was justified. We were, however, of the opinion, contrary to the view expressed by our medical expert, that the insured had not been aware that he suffered from early Parkinson’s disease and that he had not fraudulently withheld information of his visit to the neurologist. The policies were taken out for business purposes and we accepted that this was not a case where the insured knowingly non-disclosed information in the hope of benefiting from it at a later stage. Even though we regarded the non-disclosure as non-fraudulent we could not find in his favour since fraud by the insured was not a legal prerequisite for the repudiation of a policy by the insurer.
This office has in the past held the view, as it did in this case, that where a visit to a specialist doctor is not disclosed it would normally be regarded as evidence of material non-disclosure. In this case there were also specific questions relating to insured’s visits to specialist doctors which the insured answered negatively since he regarded the disclosure of his back and neck problems and the visits to the physiotherapist as sufficient disclosures.
The insured, confronted with our conclusion that the insurer was entitled to repudiate liability under the policy notwithstanding his “innocence”, asked us to liaise with the insurer about a possible ex gratia payment.
We did so and were gratified that the insurer was prepared to make an offer of settlement of a third of the benefit on each policy, plus a return of premiums, less costs incurred. This amounted to R280 683. The insured accepted the offer in full and final settlement and the case was closed.