In this case, the policyholder had been receiving income protection payments from May 2023 until February 2024. However, TAL ceased these payments without informing the claimant beforehand. It wasn't until June 2024 that TAL issued a procedural fairness letter, several months after the payments had already stopped.
AFCA determined that TAL's actions were unjust, stating that insurers are obligated to provide policyholders with an opportunity to respond before halting benefit payments. The authority emphasised that procedural fairness necessitates such communication and that insurers should not suspend benefits during ongoing investigations.
This ruling serves as a crucial reminder for both insurers and policyholders. For insurers, it highlights the necessity of adhering to fair procedures and maintaining transparent communication with clients. Policyholders, on the other hand, should be aware of their rights and the importance of receiving timely notifications regarding any changes to their benefits.
In light of this decision, individuals holding income protection insurance are encouraged to review their policies and ensure they understand the terms and conditions, particularly those related to claim procedures and benefit payments. Staying informed can help policyholders advocate for their rights and ensure they receive the support they are entitled to during challenging times.
