Draft FSC Code of Practice still fails to prevent harmful surveillance and excessive trawling of customers’ medical records
24th Jan 2019
The draft Life Insurance Code of Practice tabled by the Financial Services Council (FSC) still fails to adequately protect consumers from excessive scrutiny of their medical records, harmful surveillance and forced ‘doctor-shopping’, according to the Australian Lawyers Alliance (ALA).
In a submission to the FSC, the ALA says the draft Code will result in improvements for consumers but still fails to address several important issues raised by the Financial Services Royal Commission.
“Some of our key concerns focus on how customers’ medical histories are scrutinised and how their ongoing medical reviews are managed,” said Mr Josh Mennen, spokesperson for the ALA.
“The Code should, but does not, ban insurers from asking claimants to complete open-ended medical questions that enable insurers to trawl through irrelevant private documentation dating back to childhood, despite calls for all authorities to be precise and targeted.
“In striking a balance between the insurer’s need to understand the risk being proposed when considering an insurance application and a consumer’s privacy and consumer rights, we believe insurers should only be entitled to obtain records dating back a reasonable period of time - no more than five years prior to policy inception.
“Too often we see consumers’ insurance rights compromised by a medical record reporting stress or anxiety which in reality has resolved many years before the insurance application, but is used by the insurer to decline the application or even avoid the policy at claim time despite accepting premiums.”
The ALA also believes that the Code has not sufficiently addressed the notorious risks of surveillance for mentally ill claimants, as highlighted by the Royal Commission. The ALA has called for insurer surveillance of consumers with mental health conditions to be allowed only with prior approval from an independent body.
“This approval should be provided only if if there is medical opinion that there is no danger that the proposed surveillance, conducted lawfully, will cause harm to the claimant.”
The Code also continues to allow insurers to send claimants to multiple medical experts of the same discipline as long as there is a six-month wait between consultations, thereby endorsing ‘doctor shopping’.
“That is inappropriate. The Code should make it clear that if a further consultation is genuinely needed after six months due to a development in the claimant’s condition, the insurer should, wherever possible, send the claimant back to the original doctor for supplementary opinion, not to a new doctor,” said Mr Mennen.
Read the complete ALA submission to the FSC here.