The Unmentioned Cardiology Referral
Rónán, aged 38, applies for €500,000 of 20-year term life cover. On the application he answers “No” to: “Have you ever had chest pain, palpitations or been referred to a cardiologist?” Eighteen months earlier his GP had referred him to a cardiologist for chest pain. Investigations were normal and he was discharged. He says he did not think the episode was relevant. He also omits that his father died of a heart attack at 52. The insurer issues the policy at standard rates. Rónán dies of a heart attack 20 months later. The insurer obtains the GP and cardiology records, declines the claim, avoids the policy and refunds the premiums. His widow, Sinéad, complains to the insurer and then to the Financial Services and Pensions Ombudsman.
1. Analyse whether the insurer can avoid the policy or must apply a proportionate remedy under the Consumer Insurance Contracts Act 2019. Distinguish the possible categories of misrepresentation.
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Rónán is a consumer and the 2019 Act applies to this life policy. The insurer asked a specific question about chest pain, palpitations and cardiology referral. Rónán had been referred to a cardiologist for chest pain only 18 months earlier, so the answer “No” was inaccurate.
The category of misrepresentation decides the remedy:
- Innocent - Rónán reasonably believed the episode was irrelevant. The insurer cannot avoid; it may apply a proportionate remedy.
- Negligent - Rónán failed to take reasonable care in answering. Again, no avoidance; proportionate remedy.
- Reckless - Rónán did not care whether the answer was true. The insurer may avoid.
- Deliberate - Rónán intended to mislead. The insurer may avoid and may retain the premium.
The insurer’s avoidance is only lawful if it can establish reckless or deliberate misrepresentation. The fact that the investigations were normal does not make the question untrue: the referral itself was within the question. But Rónán’s explanation that he did not think it was relevant points to negligence rather than deliberate dishonesty. The insurer should therefore start from a proportionate remedy, not automatic avoidance. The omitted family history is relevant only if the application asked about it; under the 2019 Act there is no general duty to volunteer information that was not requested.
2. Explain what the insurer must establish to calculate a proportionate remedy and how the omitted family history affects the underwriting assessment.
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To apply a proportionate remedy, the insurer must show what it would have done if the true facts had been disclosed. It should obtain evidence from its underwriters, not reconstruct the decision after the claim.
Possible outcomes:
- If the insurer would have issued standard terms anyway, the full €500,000 is payable.
- If it would have charged a higher premium, the sum payable is reduced in proportion to the premium underpayment.
- If it would have imposed a cardiac exclusion, the heart attack claim may fall outside cover.
- If it would have declined the risk altogether, the proportionate remedy may be nil - but the insurer must prove that underwriting position with contemporaneous guidelines and evidence.
The family history is material to life underwriting. A father dying of a heart attack at 52 may lead to a loading, further investigation or a higher premium. But it only matters if the application asked about family history. If it did, the omission should be included in the underwriting reconstruction. If it did not ask, the insurer cannot treat the omission as a misrepresentation. The insurer should combine both issues and decide what terms it would actually have offered.
3. Advise Sinéad on the complaint route and the approach the Financial Services and Pensions Ombudsman is likely to take.
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Sinéad should first use the insurer’s internal complaints procedure and ask for a final response. If she remains dissatisfied, she can complain to the Financial Services and Pensions Ombudsman. The complaint should focus on whether avoidance was proportionate and whether the insurer properly applied the 2019 Act.
The Ombudsman will look at the insurer’s underwriting evidence, the application questions, the medical records and the insurer’s decision-making. It is likely to ask:
- Was the answer actually inaccurate?
- Was the misrepresentation innocent, negligent, reckless or deliberate?
- What would the insurer have done had it known the true facts?
- Did the insurer apply a proportionate remedy rather than automatic avoidance?
If the insurer cannot show reckless or deliberate conduct, the Ombudsman may set aside the avoidance and require a proportionate settlement or payment of the claim. The Ombudsman can also award compensation for distress and inconvenience caused by poor handling. Sinéad should keep all correspondence and request the insurer’s underwriting guidelines and the calculation behind its decision.