OLHI OLHI – OmbudService for Life & Health Insurance | Resolution of your Canadian Insurance Concerns | OLHI

After Mr. J.’s father died, he claimed the benefits under several term life policies with the same insurance company. All were paid out, except one, which had lapsed several years prior for non payment of premiums. The insurance company denied the claim because they had mailed Mr. J.’s father a Notice of Premium Due before the policy lapsed.

Mr. J. brought his final position letter to OLHI. He explained to our Dispute Resolution Officer (DRO) that his father did not receive the Notice. Acting as his father’s Power of Attorney, Mr. J. had contacted the insurance company to set up automatic payments for the premiums. At the same time, he asked the customer representative about the status of all the policies. The representative assured Mr. J. that all were in good standing.

OLHI’s DRO reviewed information from Mr. J. and the insurance company. She recommended an OmbudService Officer (OSO) investigate further. In his review, the OSO noted two key details: First, not only was Mr. J. told in a phone call that all policies were in good standing, he also received a letter two years later, confirming that all the insurance policies were in force – including the lapsed policy. Second, the insurance company’s Notice was sent to the wrong address. When the mail was returned to the company, it did not check its records for the accurate address. The correct address was in fact on file with the insurance company.

The OSO contacted Mr. J.’s insurance company to discuss the situation. He explained that Mr. J. had called the insurance company during the period of time when the policy could have been reinstated. Had he been told about the lapse then, it was reasonable to believe he would have reinstated the policy since he already had several other policies with the company. Because he was given wrong information, the window to exercise the right to reinstate had passed.

The insurance company agreed with OLHI’s recommendation to pay the insurance benefit on the remaining policy.

Disclaimer: Names, places and facts have been modified in order to protect the privacy of the parties involved. This case study is for illustration purposes only. Each complaint OLHI reviews contains different facts and contract wording may vary. As a result, the application of the principles expressed here may lead to different results in different cases.

Mr. T. contacted OLHI to seek assistance with reinstatement of his retirement group life insurance benefit. The Dispute Resolution Officer who took the call learned that this benefit had been allowed some years ago as part of an early retirement package negotiated with his employer. The employer was a life and health insurer, and OLHI Member Company.

OLHI learned that all had proceeded smoothly for several years until Mr. T.’s former employer sent him a letter which he did not receive because it was mailed to an out-dated postal address. This letter contained a notice advising the consumer that a medical certification of total disability was required to maintain his life insurance benefit. That letter was followed by another from his former employer, a month later, advising that his life insurance benefit had been cancelled for lack of the required medical certificate. This second letter was sent to Mr. T.’s current address.

OLHI was told that Mr. T. had immediately called his former employer to address the situation, at which point he learned that the letters had been sent to different addresses because separate databases had been used to locate his contact information. As it turns out, the database used to send the first notification letter had not been appropriately updated. Upon learning of this administrative glitch, Mr. T. sought written confirmation that his life insurance benefit would continue as part of his retirement package. Much to his dismay, several months later, the company confirmed that it would not continue the benefit on the basis that there was no commitment to do so.

Fortunately, Mr. T.’s former employer elected to treat the situation as an insurance matter, rather than an employment issue. As a result, it provided Mr. T. with a “final position letter,” inviting him to contact OLHI if he was dissatisfied. As is customary, the insurer’s final position letter provided OLHI’s contact details and a brief explanation of OLHI’s independent role in assisting life and health insurers and consumers to resolve their differences.

Following the conversation with Mr. T. and a review of the insurer’s final position letter, it was decided that the facts of the case warranted further investigation by an OLHI OmbudService Officer (OSO). The OSO reviewed the information collected to date and then spoke at length with the consumer. He ascertained that the agreement to provide Mr. T. with early group retirement benefits had indeed been made some years ago and that it was an oral commitment made with his employment superiors of the day. The consumer was very concerned because he now believed himself to be uninsurable and because some of the subscribers to the original agreement were no longer with the company.

Subsequently, the OSO prepared a written submission to the consumer’s employer, setting out the facts and issues as he understood them. He suggested that, although there was no written confirmation on the part of the company to provide Mr. T. with retirement group benefits, the fact that coverage had been provided for many years was evidence of that commitment. It was suggested that the commitment could not be voided by a notification error for which the consumer was not responsible.

In due course, the consumer’s employer replied, advising that it had reconsidered its original position and had arranged with the employer’s group benefits insurer to reinstate the consumer’s group life insurance benefit. As before, the life insurance benefit was subject to ongoing medical certification of total disability.

The employer thanked OLHI for bringing the issue of conflicting address databases to its attention and confirmed that it had undertaken an internal review of its employee address records. This review resulted in the company changing its policy on record keeping practices for employee addresses so that problems of this nature would not occur in the future with Mr. T. and other current or former employees.

Disclaimer: Names, places and facts have been modified in order to protect the privacy of the parties involved. This case study is for illustration purposes only. Each complaint OLHI reviews contains different facts and contract wording may vary. As a result, the application of the principles expressed here may lead to different results in different cases.

Ms. M. called OLHI to seek assistance with reinstatement of her disability benefits. Initial discussions with one of our Dispute Resolution Officers revealed that she had received long-term disability benefits for a period of well over two years. Payments were stopped on the basis that she was not cooperating with the rehabilitation program arranged by her insurance company, as evidenced by several missed treatment sessions. There was also an underlying suspicion by the insurance company that Ms. M. may have been “malingering.” Accordingly, the complaint was referred to one of our OmbudService Officers (OSO) for a more detailed examination.

As is the norm, Ms. M.’s group disability plan provided benefits for a 24-month period upon satisfactory proof that she was unable to perform the duties of her own pre-disability occupation. To qualify for benefits after that period, she was required to provide satisfactory evidence that she was unable to perform any occupation for which she was “reasonably suited” by education, training or experience.

The OSO assigned to the case noted that the insurer had continued to accept Ms. M.’s disability beyond the initial 24-month period but had apparently become concerned about the potential duration of the claim due to Ms. M.’s relatively young age. As a result, Ms. M.’s insurer prescribed a rehabilitation program with a view to assessing her ability to return to the work force.

Our Officer spoke at length with the insured and determined that this case would best be served by his independent review of the insurer’s claim file. The insurer readily agreed.

Through the course of his investigation and analysis, our OSO noted that there were conflicting issues and points of view. The insurer’s concern about the claim was perfectly understandable. To its’ credit, the insurance company had continued the claim well beyond the 24-month initial period and had decided to invest in Ms. M.’s rehabilitation. On the other hand, our Officer’s review suggested that the design of the insurer’s rehabilitation program may have been ill suited to Ms. M.’s disability.

He was also concerned about the insurer’s deeply engrained suspicion of malingering, which did not seem to be firmly grounded in the facts. Specifically, a conclusion of malingering was not supported by the observations of the attending physician nor by Ms. M.’s willing participation in various other alternative treatments designed to alleviate her disability.

Upon conclusion of his review, the OSO prepared a detailed written submission to the insurer. He acknowledged the insurer’s support of the claim and decision to invest in Ms. M.’s rehabilitation. On the other hand, he pointed out that Ms. M.’s disability under the policy was not in dispute and that her inability to consistently attend all rehabilitation sessions was likely explained by the unsuitability of the rehabilitation program, rather than a lack of desire to “cooperate” with a suitable program.

With the benefit of having reviewed this complaint from an independent perspective, the Officer also suggested that the insurer’s suspicion of malingering was not supported by the facts.

The insurance company agreed to consider our OSO’s perspective and quickly responded with an offer that resolved the complaint to the satisfaction of both parties. In sum, the insurer agreed to reinstate Ms. M.’s claim retroactively on the understanding that she would follow a new rehabilitation program suitable for her medical condition, developed in consultation with her attending physician. Both parties were satisfied with the result and we understand that Ms. M. is now successfully following her new rehabilitation program.

Disclaimer: Names, places and facts have been modified in order to protect the privacy of the parties involved. This case study is for illustration purposes only. Each complaint OLHI reviews contains different facts and contract wording may vary. As a result, the application of the principles expressed here may lead to different results in different cases.