Haku

FINE-042350

Tulosta

Asianumero: FINE-042350 (2022)

Vakuutuslaji: Sairausvakuutus

Ratkaisu annettu: 29.04.2022

Lakipykälät: 20, 22, 24

The duty of disclosure of the insured at the time of conclusion of the insurance contract. Did the insured fail to fulfil his duty of disclosure through more than slight negligence? Tight and short lip frenulum. Health declaration. Individual exclusion clause. Did the insurance company plead the failure to fulfil the duty of disclosure without undue delay?

Information on the events

On 26 November 2018, A applied for a voluntary personal insurance policy for her child B (b. 2018), including cover for treatment expenses incurred from accidents and illnesses. At the time of application, B’s other guardian filled in a health declaration, and the insurance policy was granted with the normal terms and conditions. The policy became effective on 26 November 2018.

On 2 May 2019, A made a compensation claim for the labial frenectomy that was performed on B on 27 November 2018. On 5 November 2019, the insurance company issued a compensation decision in the matter, according to which the expenses from the labial frenectomy could not be covered. At the same time, the insurance company declared that it would change its decision granting the insurance policy.

The insurance company referred to the medical reports it was provided with and stated that according to the patient record dated 27 November 2018, B had been having aerophagia (air swallowing), problems with weight gain and a weak breastfeeding latch. The upper lip frenulum was found to be considerably tight and short. In the insurance company’s view, the aforementioned facts should have been indicated in the health declaration at the time of applying for the insurance policy. This information should have been given in the answer to the question: “Does the insured currently have, or has the insured had during the last month, any other symptoms in addition to those declared above?”

The insurance company considered that the insured had failed to fulfil his duty of disclosure under Section 22 of the Insurance Contract Act through more than slight negligence. The company stated that if the correct information had been given before the conclusion of the insurance contract, an individual exclusion clause concerning the tight lip frenulum and its sequela would have been included in the insurance policy. The insurance company referred to Section 20 of the Insurance Contracts Act and declared that it would insert an individual exclusion clause into the insurance policy, according to which compensation would not be paid on expenses incurred from the examination or treatment of a tight lip frenulum or its sequela. The insurance company also considered, under the aforementioned exclusion clause and Section 24 of the Insurance Contracts Act, that it was not obliged to cover the treatment expenses claimed.  

A appealed the case. In its decision dated 29 April 2020, the insurance company’s internal appeals body found that the decision dated 5 November 2019 was in compliance with the terms and conditions of the insurance policy and with the law. The health declaration filed with the insurance policy application did not mention any symptoms or concerns related to B’s health. However, B was taken to see a doctor on the day immediately following the health declaration, and his tight lip frenulum was cut at that consultation. Considering that the doctor was consulted shortly after the health declaration was given and that there were medical grounds for the labial frenectomy at the time, B’s guardians must have been aware of the problem related to his tight lip frenulum even before applying for the insurance policy.    

The customer’s complaint

B’s guardians are dissatisfied with the decision of the insurance company and are asking the Insurance Complaints Board to issue a recommended solution in the case.

The guardians do not accept the individual exclusion clause inserted into the insurance policy. They do not understand how the insurance company can insert an individual exclusion cause into the policy even though B was not found to have any illness or any other health problems in the regular health checks in public healthcare. At the time of applying for the insurance policy, B was a completely healthy baby, and the guardians thus suspect that the individual exclusion clause was inserted into the policy because of the baby’s nationality. The guardians also do not understand how the insurance company can insert an exclusion clause into the insurance policy afterwards without informing the policyholder of the change. The guardians consider that with the addition of the exclusion clause, B’s insurance policy does not correspond to the policy they originally purchased for their baby.

The guardians find that the insurance product they purchased was faulty, and they demand a refund of the insurance premiums they have paid. In addition, they demand reimbursement for the time they have spent taking care of the matter.

Reply by the insurance company

The insurance company disputes A’s claims. The company remains of the opinion that its decision was correct. With regard to its reasoning, the insurance company refers to its earlier statements in the case.

In addition, the company explains the course of events in more detail and notes that at the time of making the loss report on 2 May 2019, A mentioned that B had been found to have a tight lip frenulum during a visit to the child health clinic. The nurse at the clinic had told them to purchase an insurance policy for B and then seek an appointment for a labial frenectomy at a private health clinic. After the visit to the child health clinic, an insurance policy was purchased for B, after which the labial frenectomy was performed at the private health clinic.

When A made the loss report by phone on 2 May 2019, the representative of the insurance company asked her to provide the medical records on B from the child health clinic and the private clinic. On 16 May 2019, the insurance company received patient records dated 8 May 2019 concerning the labial frenectomy performed on 27 November 2018. On 11 July 2019, the insurance company received a part of the medical records for the visits to the child health clinic. On 2 August 2019, the claims advisor of the insurance company requested A to provide the medical records for all the child health clinic visits starting from B’s birth. A new request for this further information was made on 9 September 2019.

On 10 September 2019, A phoned the insurance company and said that it was difficult for her to understand everything that the insurance company requested and she could not find the information requested. A asked the insurance company to process the case based on the information that had already been provided. The insurance company’s claims advisor phoned A on 27 September 2019 and asked her again to provide the missing medical records. The insurance company received copies of the child health information card on 1 October 2019 and 2 October 2019. On 4 November 2019, the insurance company received a medical report sent by the private clinic, dated 31 October 2019, concerning the labial frenectomy performed on B on 27 November 2018. According to the report, B had been having aerophagia, problems with weight gain and a weak breastfeeding latch. In addition, the lip frenulum was tight and short. B had been receiving a combination of breastfeeding and formula feeding.

The insurance company observes that based on the private clinic’s report, the reasons for the labial frenectomy performed on B on 27 November 2018 were B’s state and his symptoms, which had existed even before the insurance policy became effective. The health declaration on which the policy was based was sent to the insurance company on 26 November 2018, on the evening preceding the labial frenectomy. Even though B’s child health information card makes no mention of any specific illness or symptom, the insurance company considers that when B’s guardian made the health declaration, he must have been aware of the symptoms described in the private clinic’s report that led to the frenectomy. The question “Does the insured currently have, or has the insured had during the last month, any other symptoms in addition to those declared above?” should thus have been answered with “yes” and the symptoms should have been specified. Since this was not done, the company was justified in adding the aforementioned permanent retroactive exclusion clause to the insurance policy.

The insurance company observes that apart from this individual exclusion clause, the insurance policy was in effect under the normal terms and conditions until 10 August 2020, when the policy was terminated by the insurance company on account of a failure to pay the insurance premiums.

The insurance company finds that it was justified in charging insurance premiums for the period of validity of the insurance policy. B’s representatives have not presented any grounds that would oblige the insurance company to refund even a part of the insurance premiums or to reimburse for the expenses and the inconvenience of dealing with the matter. The insurance company also notes that it has outstanding receivables from the period of 15 June 2020 to 10 August 2020, amounting to EUR 94.88 in unpaid insurance premiums and EUR 5.00 in collection charges.

Based on the grounds it has presented, the insurance company finds that the Insurance Complaints Board should not recommend a change in the case.

Reports

1. The insurance policy application and the health declaration

B’s guardian signed the health declaration on 26 November 2019 at 21:20. In the declaration, he indicated the height, weight, BMI and weight at birth of B, the person to be insured. B’s guardian gave a negative answer to all the questions on examinations, treatments, illnesses and disabilities in the health declaration. B’s guardian also gave a negative answer to the question below, concerning any symptoms of the person to be insured: 

“Does the insured currently have, or has the insured had during the last month, any other symptoms in addition to those declared above?” According to the clarification to the question, “‘Symptom’ means a symptom caused by an illness or a disability, such as pain, ache, swelling, shortness of breath, a lump found in the body or a functional disorder or mood disorder”.

2. Medical reports

The Insurance Complaints Board has at its disposal B’s medical reports for the period of 1 October 2018 to 16 July 2019.

The copies of B’s child health information card include such information as the development of B’s height, weight and head circumference during the first nine months. B’s birth weight was 3760 g. He lost weight after birth, and his weight development was monitored during visits to the child health clinic on 3 October 2018, 4 October 2018, 8 October 2018, 9 October 2018, 11 October 2018, 17 October 2018, 19 October 2018 and 23 October 2018. According to the entry made by the nurse on 17 October 2018, B’s weight development was not optimal at first. However, according to the entry dated 19 October 2018, he had started to gain weight, and the record dated 23 October 2018 notes that his weight gain was going well now. On 23 October 2018, at around three weeks of age, B had reached his birth weight. According to the entry dated 27 November 2018, B’s growth had been very good. The entry also mentions that the labial frenectomy had been performed at the private clinic on the same day.

A patient record extract from the private clinic dated 8 May 2019 includes the information on the visit to the clinic on 27 November 2018. According to the patient record entry dated 27 November 2018, the visit concerned a two-month-old baby with aerophagy, problems with weight gain and a weak breastfeeding latch. The entry mentions that the lip frenulum was considerably tight and short. The palate and throat were found to be normal. The recorded diagnosis was Q38.1: Tight upper lip frenulum. B’s upper lip frenulum was cut with scissors near the alveolar ridge under local anaesthesia so that the upper lip became mobile and was able to turn out. The recorded indication for the operation was the tight lip frenulum that caused problems for breastfeeding. The recorded operation code was EAB10: Labial frenectomy.

The patient record extract from the private clinic dated 31 October 2019 contains exactly the same patient record of the visit on 27 November 2018 as the patient record extract dated 8 May 2019.

Recommended solution

Formulation of the question

The case concerns the question of whether the insured failed to fulfil his duty of disclosure at the time of giving the health declaration by more than slight negligence and whether the insurance company was justified in inserting the individual exclusion clause concerning the examination and treatment of the lip frenulum and its sequela into the insurance policy. The case additionally concerns the question of whether the insurance company is obliged to refund the insurance premiums paid and to reimburse for the time spent dealing with the appeal case.

Applicable norms of law and policy terms

Under the Insurance Contracts Act (28 June 1994/543), Section 20 (14 May 2010/426), Subsection 1, if the policyholder or the insured wilfully or out of negligence that cannot be considered slight fails to fulfil the duty of disclosure imposed on him in Section 22 and the insurer would have issued the insurance only against a higher insurance premium or on terms and conditions other than those agreed had true and complete information been given, the insurance continues to be in force against such higher premium and on such other conditions. The same applies if the policyholder or the insured has acted in bad faith while fulfilling his duty of disclosure and the insurance contract is nevertheless binding on the insurer pursuant to Section 24, Subsection 3.

Under Section 20, Subsection 3, after learning about the failure to fulfil the duty of disclosure or about a change in any circumstance relating to the insured the insurer shall, without undue delay, dispatch a notice to the policyholder indicating how and at what date the premium or other terms or conditions change. The notice shall include a mention that the policyholder is entitled to terminate the insurance policy. If the insurer fails to dispatch a notice in accordance with the provisions contained herein, its right to alter the premium or any other terms or conditions is forfeited.

Under Section 22 of the law, before the issuance of an insurance contract, the policyholder and the insured shall give true and complete answers to the insurer's questions which may be of importance for the assessment of the liability of the insurer. Moreover, throughout the insurance period, the policyholder and the insured shall without undue delay rectify any errors or deficiencies that they may discover in the information given to the insurer.

Under Section 24, Subsection 2 of the law, if the policyholder or the insured has, either wilfully or through negligence which cannot be considered slight, failed to fulfil the duty of disclosure, and if the insurer had not issued the insurance had true and complete answers been given, the insurer is discharged from liability. If, however, the insurer had issued the insurance in any case but only against a higher premium than agreed or otherwise on different terms, the insurer's liability is limited to an amount which corresponds to the agreed premium or to the terms and conditions on which the insurance would have been issued.

Evaluation of the case

1. Failure by the insured to fulfil the duty of disclosure

Under Section 22 of the Insurance Contracts Act, before the issuance of an insurance contract, the policyholder and the insured shall give true and complete answers to the insurer's questions which may be of importance for the assessment of the liability of the insurer. If the policyholder or the insured has failed to fulfil this legal duty, the consequences of the failure in the context of a personal insurance shall be assessed according to Section 24 of the Insurance Contracts Act as far as the responsibility of the insurance company is concerned. As for the continuation of a personal insurance policy under changed terms and conditions, this falls under the provisions of Section 20 of the Insurance Contracts Act.

In evaluating whether the policyholder or the insured has been guilty of failure to fulfil his duty of disclosure and in evaluating the nature of his potential negligence, the things to take into consideration include the information available to him and the prevailing circumstances at the time of taking out the insurance. In addition, attention must be paid to the nature and clarity of the questions asked by the insurer. The negligence can be considered to be nonexistent or slight if, for example, the insurer’s question was so general or ambiguous that it was difficult to give a precise and complete answer.

In the case at hand, B’s guardian gave a negative answer to all the questions on examinations, treatments, illnesses and disabilities in the health declaration he signed on 26 November 2018. He also gave a negative answer to the question: “Does the insured currently have, or has the insured had during the last month, any other symptoms in addition to those declared above?” According to the health declaration, ‘symptom’ means a symptom caused by an illness or a disability, such as pain, ache, swelling, shortness of breath, a lump found in the body or a functional disorder or mood disorder.

The Insurance Complaints Board refers to the medical information at its disposal concerning B and observes that according to the copies of the child health information card, B lost weight immediately after birth, which is typical for a newborn’s weight development. However, the weight should start increasing soon and the birth weight should be regained within 7 to 10 days from birth (Duodecim Terveyskirjasto, imeväisen yksilöllinen kasvutapa, accessed on 8 February 2018). In B’s case, the weight development was not optimal immediately, and it was closely monitored during the first few weeks. At first, monitoring check-ups took place every few days at the child health clinic. During the first month, there were eight visits to the child health clinic in all, a considerably larger number than in a situation where specific monitoring is not needed. At around three weeks of age, B had reached his birth weight.

B was taken to a private clinic on 27 November 2018. The patient record mentions B having problems with weight gain, aerophagia i.e. air swallowing and a weak breastfeeding latch. The doctor treating B noted that his lip frenulum was tight and short, which hindered breastfeeding. It was decided that a labial frenectomy would be performed in order to alleviate the problem.

Considering that B’s weight development was closely monitored at the child health clinic during the first few weeks and that the problems with weight gain were also discussed during the consultation visit on 27 November 2018, the Insurance Complaints Board finds that B’s guardian must have been aware of the problems with B’s weight gain when he was giving the health declaration on 26 November 2018. The Insurance Complaints Board notes that weight development is a major factor in assessing a baby’s wellbeing and development during the first few months of life. Any problems with weight gain are thus taken seriously and if necessary, weight development is monitored through additional check-ups. Problems with weight gain may be due to several different reasons. A tight lingual frenulum, for instance, may cause newborns to have sucking problems, due to which nutrition is not necessarily adequate and the weight does not develop normally. In B’s case, too, it was noted that there were problems with the latch, and additionally B was said to have had an air swallowing problem during feeding.

Considering that in the case at hand, the problems specifically concerned the weight gain of a newborn, the Insurance Complaints Board finds that this was the kind of functional disorder meant in the health declaration that B’s guardian should have mentioned while giving the health declaration.

Considering the aforementioned as well as the fact that the health declaration was given on the evening preceding the consultation visit, the insured must be considered to have failed to fulfil his duty of disclosure through more than slight negligence.

2. The insertion of an exclusion clause into the insurance

The Insurance Complaints Board observes that under Section 20, Subsection 3, of the Insurance Contracts Act, after learning about the failure to fulfil the duty of disclosure, the insurance company shall, without undue delay, dispatch a notice to the policyholder indicating how and at what date the premium or other terms or conditions change. If the insurer fails to do this, its right to alter the premium or any other terms or conditions is forfeited. The government proposal for an Insurance Contracts Act (HE 114/1993, Section 25 of the Insurance Contracts Act, detailed motivation) states that when estimating the time necessary for dispatching a notice, attention shall be paid to the amount of time generally necessary for an insurer acting with due care to reach a decision in similar cases.

The Insurance Complaints Board observes that on 2 May 2019, A made a compensation claim for the labial frenectomy performed on B. On 5 November 2019, the insurance company informed A of the change in the insurance policy’s terms and conditions due to the failure to fulfil the duty of disclosure. In its notice concerning the change to the decision granting the insurance policy, the insurance company refers to the failure to disclose the information contained in the medical record dated 27 November 2018 at the time of giving the health declaration. According to the information presented to the Insurance Complaints Board, the insurance company had the patient record for the visit of 27 November 2018 at its disposal for the first time on 16 May 2019, when it received the patient record extract dated 8 May 2019 from the private clinic.

The Insurance Complaints Board notes that the insurance company dispatched the notice concerning the change in the insurance policy decision nearly six months after it first learned of the facts that served as basis for its view that the insured failed to fulfil his duty of disclosure. The Insurance Complaints Board therefore finds that in this case, the company failed to dispatch the notice on the continuation of the insurance policy under changed terms and conditions without undue delay in accordance with Section 20, Subsection 3, of the Insurance Contracts Act. The right of the insurance company to plead the failure of the insured to fulfil his duty of disclosure was thus forfeited, and the exclusion clause concerning the tight lip frenulum and its sequela did not become part of the insurance policy. The Board recommends that the insurance company should process the compensation claim concerning the labial frenectomy accordingly.

As for the demand by B’s guardians that the insurance company should refund the paid insurance premiums, the Insurance Complaints Board states that the insurer is entitled to the insurance premium for the period of validity of the insurance policy. In this case, no grounds have been presented to justify an obligation for the insurance company to refund the insurance premiums.

B’s guardians have also demanded reimbursement for the time spent dealing with the appeal case. In this regard, the Insurance Complaints Board observes that the Board follows the Regulations of the Finnish Financial Ombudsman Service (FINE) in its actions. Under Section 6 (Responsibilities and areas of competence of the Complaints Boards) of the Regulations, reimbursement for any expenses incurred from submitting a complaint shall not be examined in a dispute. The Insurance Complaints Board thus expresses no opinion on this demand by B’s guardians in this recommended solution.

Final outcome

The Insurance Complaints Board finds that the insurance policy was in effect without the exclusion clause concerning the tight lip frenulum and its sequela until 10 August 2020, when the insurance company terminated it on account of a failure to pay the insurance premiums. The Board recommends that the insurance company should process the compensation claim concerning B’s labial frenectomy accordingly.

The Insurance Complaints Board’s decision was unanimous.

INSURANCE COMPLAINTS BOARD

Chair Luukkonen                                       
Secretary Sternhufvud

Members:
Kummoinen
Niklander
Rahijärvi
Sibakov