What to do if a life or health insurance claim is declined in NZ

Step 1: get the reasons in writing

Ask the insurer to set out, in writing, why the claim was declined and which part of the policy it relied on. Ask for copies of what it relied on, such as your application answers, medical notes it obtained, and the policy wording that applied at the time.

Write down dates, names and what was said in calls. If the decline is partial, for example a reduced benefit or an exclusion applied, ask how the amount was worked out.

Why are claims commonly declined?

• Non-disclosure. The insurer says something in your health or lifestyle history was not disclosed when you applied, and it would have changed the terms. This is one of the most common reasons.
• The definition was not met. For TPD, trauma or income protection, the insurer says your condition does not meet the policy's definition, or not yet.
• An exclusion applies. Some policies exclude specific conditions or activities, either generally or for you after underwriting.
• The policy was not in force. For example, it lapsed for unpaid premiums, or the event happened before cover started or during a stand-down period.

Step 2: complain to the insurer

Use the insurer's internal complaints process, not just the claims team. Say plainly that you are making a complaint, what you want (the claim paid, reconsidered, or the decision explained), and include anything new, such as a specialist's report. Ask how long it will take and when you can go to the dispute scheme.

Step 3: take it to a dispute resolution scheme

The Financial Service Providers Register lists the approved schemes:

“There are 4 schemes approved by Consumer Protection to provide financial dispute resolution services. They are: Banking Ombudsman (BOS) · Insurance and Financial Services Ombudsman (IFSO) · Financial Services Complaints Limited (FSCL) — a Financial Ombudsman Service · Financial Dispute Resolution Service (FDR)”

— Financial Service Providers Register, Choosing a dispute resolution scheme

FSPs offering a service to retail clients must belong to an approved dispute resolution scheme. Your insurer's scheme is named in its complaints information and on the register. Using it is free for you, and you do not need a lawyer.

If you had an adviser

If a financial adviser arranged the policy, tell them the claim was declined. They can often help gather evidence and deal with the insurer. If your complaint is about the advice itself, for example that a condition was not disclosed because of how the application was handled, that complaint goes to the adviser's own dispute scheme. You can check who an adviser is and which scheme they belong to on the register.