Advisers are reminded failure to disclose counts as fraud
The effects of non-disclosure on critical illness applications were hammered home to delegates at the COVER Protection Forum in a seminar session hosted by Adam Proctor, claims manager at Scottish Equitable Protect.
Proctor told delegates that non-disclosure does not just mean the policy will be invalid at the point of claim, but that it constitutes as fraud in the eyes of the law.
Even if non-disclosure does not relate to the condition the policyholder is claiming on, Proctor said the claim would still be rejected as it is a breach of contract.
With the cost of GP reports going up, Proctor said it was doubly important for advisers to make sure clients disclosed medical conditions, as the chances were the insurer would not check up until they try to claim.
"Unless underwriters part-icularly query a question, insurers will not seek a GP's report. They cost £55 a shot and we are trying to keep critical illness cover a low-cost product. This is why non-disclosure is so important," he said.
To prevent allegations from clients claiming they did not know they had to disclose, Proctor advised delegates to send clients a copy of their application form at the same time they send it to the insurer. This way, clients will know exactly which questions they were asked and how they answered them, should there be a claims dispute in the future.
Although non-disclosure is classed as fraud, Proctor said he had never experienced any legal action against policyholders or advisers. "I cannot remember a case where anyone was prosecuted for critical illness fraud. It is difficult to get the police involved because when claims are turned down, policyholders do not get away with the money," he said.
Concerned delegates asked Proctor about the rules on disclosing family history if you are adopted, have lost contact with family or if relatives are living abroad. "If you cannot identify your family history, then you cannot take it into account. You can only non-disclose what you already know," he said.
