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Jul 2024

Hong Kong: Business as usual for claims complaints

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Source: Asia Insurance Review | Jun 2020

The Insurance Claims Complaints Panel, an independent body established under Hong Kong’s Insurance Complaints Bureau, released claims complaints statistics and case reviews for 2019.
By Amir Sadiq
In 2019, the Insurance Claims Complaints Panel (ICB) handled a total of 749 cases, of which 622 (see Table 1) were new cases (about 4% increase compared with 598 in 2018) and 127 cases were brought forward from 2018. Out of these 749 cases, 233 were dismissed because they did not fall within the terms of reference of the ICB. Of the remaining 516 cases, 424 cases were closed whilst the balance of 92 cases were carried forward to 2020. (See Table 1)
Summary of complaints handled
The main categories of the 361 claim-related cases closed in 2019 concerned the application of policy terms, non-disclosure, excluded items, amount of indemnity and breach of warranties or policy conditions.
Hospitalisation/medical and life/critical illness constituted the two largest groups of claims disputes in 2019.
Of the 361 claims related cases closed, 79 were mutually settled between the insurers and the complainants with the auspices of the ICB secretariat. These cases did not need to go to the panel. No prima facie evidence was found in 188 cases and 59 cases were withdrawn by the claimants.
The remaining 35 cases (9.7%) were referred to the panel for deliberation. The panel ruled in favour of the complainants in 10 cases and upheld the insurer’s decision in 25 cases.
In dollar terms, 89 complainants received from insurers a total claims amount of HK$6.88m ($888,000), of which HK$6.27m was from mutual settlement and HK$614,000 from awards made by the panel. 
A case of material facts reasonably expected to be disclosed
The highest single case award for a complaint was HK$234,000.
The complainant effected a life policy with a critical illness rider for his one-year-old son (the insured). He declared clean medical history on the application form and the policy was issued on standard terms. About half a year later, the insured was diagnosed with suffering from an autism spectrum disorder by a child development centre. The complainant then filed a critical illness claim to the insurer for early stage major disease benefit for autism.
During the claims investigation, the insurer learnt from the consultation summaries of a public hospital that the insured was noted “failure to thrive at six months, catching up to 3% at eight months, borderline gross and fine development”. 
Furthermore, it was recorded in the musculoskeletal assessment that the insured was found unresponsive to name by his mother at eight months old and had consulted for being unable to walk at 12 months old. Since the aforementioned medical information was not disclosed on the policy application form, the insurer declined the critical illness claim on the grounds of material non-disclosure.
The complainant argued that the insured was confirmed to suffer from autism only six months after the policy was effected. Although the insured was small, his development was within normal range when the policy was applied. 
The doctor even advised him that there was no need to worry as the insured was at the third percentile on the growth curve and had been maintaining his own growth curve since eight months old. Furthermore, he had also stated the height and the weight of the insured in the policy application form.
Findings and ruling of the panel
The panel learned from the Child Health Record that the growth curve of the insured was along the 3% percentile line and his height and weight were within normal range of growth for boys at 12 months old. Since babies come in all shapes and sizes and the insured had been growing along the curve for his size of baby, the panel found it acceptable for the complainant to provide a negative answer on the application form when being asked if the insured had any physical defects or shown any sign of slow physical or mental development. 
As the grounds for the insurer to decline the complainant’s claim for early stage major disease benefit was not strong, the panel ruled in favour of the complainant and awarded him the early stage critical illness of for about HKD$234,000.
The panel reminded consumers that the information given by an applicant on the application form has significant impact on the insurer’s underwriting assessment. From the information given on the application form, the insurer can identify high-risk features and decide whether or not to take the risk and at what premium and terms. 
However, if the non-disclosed information is not a fact which the insured could reasonably be expected to disclose or the insured has answered the questions on the application form honestly and completely to his best knowledge and belief, the panel may rule in favour of the claimant. A 
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