Insurer loses pre-existing conditions dispute over Daisy the dog

A dog owner has been awarded cover for six of seven of the pet’s medical problems during a claim dispute hearing, with the industry adjudicator ruling conditions that arise and are treated during a policy waiting period are not always pre-existing.

The dog Daisy’s three eye conditions – a blocked tear duct, excessive watering of the eye and bilateral conjunctivitis – as well as an umbilical hernia, skin allergy and ear infection were not pre-existing conditions as defined by the policy, and so PetSure was not entitled to deny the claim, The Australian Financial Complaints Authority (AFCA) said.

AFCA also said PetSure had not met its obligation to clearly inform its customer of the policy terms because they “should be disclosed clearly in plain English and in an easy-to-follow manner”.

“I do not accept a person of average intelligence or education would easily understand the way the various policy definitions interact with each other and the insuring clause,” AFCA said of Daisy’s policy wording.

However, AFCA said PetSure could deny cover for stenotic nares, an airway obstructive issue where the nostrils are pinched or narrow which is common in short-nosed dog breeds.

It also denied Daisy’s owner’s request for compensation for stress from the handling of the claim.

“I am not satisfied there is any cover for the stenotic nares. The insurer is entitled to deny this condition. All other conditions are covered,” AFCA ruled. “This is significantly fewer conditions than the insurer sought to decline.”

PetSure conceded it made an error in an internal dispute resolution letter incorrectly saying Daisy had a heart condition and was prescribed medication for it because her vet sent an invoice for a different patient also called Daisy, and the identifying name and the address of the owner was partly covered by a letterhead.

AFCA said while PetSure should have picked up the vet’s error it was “a minor oversight”.

“Overall, I am satisfied the insurer has handled the claim and resulting complaint fairly and reasonably. While my determination requires the insurer to change its position, I am not satisfied the insurer’s position was so unreasonable it warrants an award of compensation.”

AFCA told PetSure to offer to reinstate the policy – which had been cancelled at the request of Daisy’s owner in July – and charge “the fair premium required to make the policy current”.

Daisy’s owner – who said she purchased the pup with a clean bill of health – lodged claims for veterinary expenses incurred in February and March last year. PetSure declined some on the basis the policy excluded pre-existing conditions – defined as any condition the owner or vet were aware of before the waiting period ended on March 3 last year.

The policy also excluded temporary conditions which “had not existed, occurred or shown noticeable signs, symptoms or an abnormality in the 18-month period immediately prior to your claim”.

AFCA said all of Daisy’s conditions except her nostril problem did not fall under this “18-month criteria” policy exclusion because the effect of each of those two definitions in the policy working together was that “if a condition is a temporary condition, and meets the 18-month criteria, then it is not a pre-existing condition”.

“I am not satisfied the policy supports the insurer’s interpretation,” the ombudsman said. “Other than if the temporary condition does not meet the 18-month criteria there is nothing in the policy which has the effect of limiting cover for temporary conditions arising during the waiting period.

“The insurer says the various policy definitions interact to mean a condition arising during the waiting period that is a temporary condition may become eligible for cover after 18 months. I am not satisfied this is the case,” the ombudsman said.

The dog was born in November 2020 and a ‘Pet Health Certificate’ the following January gave no information to suggest any of the disputed conditions were documented prior to the policy inception a month later – apart from stenotic nares, so this alone failed the 18-month criteria, AFCA said.

“There is also no information to suggest any of the (other) conditions existed, occurred or had shown noticeable signs, symptoms or an abnormality in the 18-month period immediately prior,” AFCA said.

PetSure had argued that all the conditions arose during the policy waiting period and were pre-existing conditions, and therefore not covered.

“Conditions during the waiting period are not always pre-existing conditions,” AFCA’s ruling said. “Just because a condition arises during the waiting period does not mean it is pre-existing condition as defined.”

It noted various conditions listed in the policy as either temporary or chronic, and said “the effect of each of the definitions in the policy working together is, if a condition is a temporary condition, and meets the 18-month criteria, then it is not a pre-existing condition.

“The policy definition of the term ‘waiting period’ … also says this is subject to the definition of the pre-existing conditions definition (which) specifically says temporary conditions meeting the 18-month criteria are not pre-existing conditions.

“Accordingly, I am satisfied a temporary condition arising during the waiting period is not a pre-existing condition if there was no evidence of it in the 18 months prior to the treatment date.”

See the full ruling here.