Code Watchdog Criticises Insurer for Misleading Rejection Letters

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The situation was highlighted by the Committee's chair, Jan McClelland, who underscored that every consumer has the right to transparent communication, especially when denied an insurance policy. McClelland pointed out that the insurer incorrectly communicated that the denials couldn't be reconsidered unless new information was provided, which was not the case.

According to the committee, 170 applicants were affected by this communication failure. The insurer has now been directed to reassess its decision letters, as well as its operator scripts, and to report its findings back to the committee. The initial issue, reported in November 2023, involved template letters that omitted crucial information about customers' rights to submit additional information or to seek a review or file a complaint.

Efforts to correct the error were initially made by the insurer with updated letters. However, these attempts fell short of the standards set by the Life Insurance Code of Practice. The compliance committee noted that the language used implied finality in the decision while simultaneously suggesting, albeit ambiguously, the possibility of a review.

The insurer's internal oversight was also criticised for failing to catch and address this lapse, leading to customer confusion. Instead of directly notifying affected customers, the insurer relied on financial advisers to communicate the information, which was inadequate according to the committee. McClelland noted that the oversight in internal checks left customers inadequately informed.

Despite not naming the insurer, the committee acknowledged the provider's efforts to rectify the situation, which played a role in withholding the name from the public.

Published:Tuesday, 24th Jun 2025
Source: Paige Estritori

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