Aviva Insurance- Having the cake and eating it?

STRAITS TIMES - Jan 31, 2007

'Pre-existing condition' strikes out cancer patient's insurance claim

Plan excludes coverage, but some rival firms say they would have paid

By Finance Correspondent, Lorna Tan

A 45-YEAR-OLD woman diagnosed with breast cancer thought her medical bill was covered by her insurance policy, but a rude shock awaited her.

Backed by medical reports, her insurer Aviva said that the 9cm lump found in her breast had begun growing before her policy took effect.

It refused to pay, saying her cancer was a pre-existing condition at the time that she signed up for her MyShield hospitalisation policy - never mind that she had no idea at the time.

Fortunately for Ms Simone Vaz, her company has paid for the bulk of her medical bills. She also managed to receive payouts from two critical illness policies, one of which she had signed up for at the same time as her MyShield plan.

Still, her case has turned the spotlight on an often-overlooked but vital issue in medical insurance - the definition of a pre-existing condition.

And the details of Ms Vaz's case underline the complexity of the question and the differing approaches of insurers in dealing with the question.

She signed up for a MyShield plan with Aviva here in January last year and it took effect on April 1. Based in Shanghai, Ms Vaz works as a communications manager at a telecommunications firm.

She was not required to take a health test by Aviva. Prior to that, the last time she had a health check was in 2004 when she applied for her China visa. Ms Vaz had never undergone a mammogram prior to the diagnosis.

The first indication that something was amiss occurred during a spa massage in Shanghai in mid-June last year when she experienced pain.

She saw a doctor in Singapore and was diagnosed as having advanced or 'stage three' breast cancer. The tumour in her breast was removed immediately at Mount Alvernia Hospital.

Her initial medical bill of $15,000 was rejected by Aviva on the grounds that\nthe condition existed before her policy was issued."

Aviva backed this up with medical opinion.

In a letter to Ms Vaz's lawyer, Aviva stated that independent medical specialists had advised that it would have taken three to nine months for the tumour to grow to 9cm from 1cm.

Ms Vaz's claim was rejected not because of non-disclosure on her part.

It was rejected because the Aviva plan excludes all pre-existing conditions regardless of whether there is disclosure or non-disclosure or whether the insured has knowledge of the condition.

Its 'pre-existing condition' clause states that 'any injury, illness, condition nor symptom which originated...prior to the policy commencement date whether or not treatment, or medication, or advice, or diagnosis was sought or received' is excluded under the policy.

When contacted on the rationale for its policy, Aviva's chief executive, Mr Keith Perkins, said that by having an objective evaluation on when an illness originated, it is protecting the interests of the majority of its policyholders.

This guards against potential abuse which may lead to higher premiums if claims go up. 'If we rely on what customers know, we'll never know,' said Mr Perkins.

Aviva receives about 5,000 MyShield claims per year and less than 1 per cent of\nthese claims are rejected because of pre-existing conditions.

Currently it has nearly 100,000 MyShield policyholders.

An insurance adviser told The Straits Times that Aviva's policy may come as a surprise to many medical insurance policyholders.

They probably assume that if they are unaware of a given condition at the time they sign up for the insurance policy, they would be covered, he said. And most of the time, they would be right.

A Straits Times check with rival insurers AIA, Great Eastern (GE), NTUC Income and Prudential found that they adhere to this principle and would have paid Ms Vaz's claim.

The clauses of GE and Prudential are similar. Prudential's clause states that a pre-existing condition is the existence of any signs or symptoms for which treatment, medication, consultation, advice or diagnosis has been sought or received by the life assured or would have caused an ordinary prudent person to seek treatment, diagnosis or cure, prior to the cover start date of this benefit or the date of any reinstatement'."

GE added in response to queries about Ms Vaz's situation that even if the doctor were able to estimate how long the condition had existed, it 'would not be fair' on the policyholder if the insurer declined the claim.

The clauses of AIA and Income are similar to each other, but more ambiguously phrased. AIA's clause states that 'any pre-existing illnesses, diseases, impairments or conditions from which the insured is suffering prior to the policy date...will not be covered', without specifying if the policyholder needs to be aware that he is suffering from the illness.

However, both insurers told The Straits Times that if a policyholder is genuinely unaware of a medical condition which is diagnosed only after the policy inception, they would pay the claim. AIA added that the insured must not have any symptoms at the time he took up the policy.

Aviva's Mr Perkins disagreed with that approach, maintaining that an independent medical opinion is crucial for an 'objective evaluation of claims'.

A clause based on customers knowing about an illness cannot be objectively evaluated as it relies on us knowing customers' personal knowledge,' he said.

'I'm not concerned that we're different from other insurers. I'm happy that we are.'

Ms Vaz said Aviva's pre-existing condition clause put an insured person 'at a complete disadvantage'. Her bills have skyrocketed to more than $70,000 due to the operation, chemotherapy and radiation sessions.

She added that her fear was that her health care would suffer due to a lack of finances when she retires or if she is retrenched.

Aviva gave her an ex gratia payment of $3,128 which she has not cashed in yet.

When contacted, a Ministry of Health spokesman said that private insurers can choose to impose additional exclusions on their Shield plans should the insured have any pre-existing illnesses.

The Consumers Association of Singapore (Case) executive director Seah Seng Choon said that in his view, the clause is 'not fair' to customers if they are genuinely unaware and have no intention of omitting information on a medical condition."

He added that if there is such a clause, the insurer should stipulate the timeframe for such pre-existing conditions and highlight the requirement to the consumer
(NB: Bold and italics are mine)

My comments:

Dear friends,

Aviva said: “Ms Vaz's claim was rejected not because of non-disclosure on her part.It was rejected because the Aviva plan excludes all pre-existing conditions regardless of whether there is disclosure or non-disclosure or whether the insured has knowledge of the condition.”

I feel the burning need to comment as it seems that Aviva’s policy-holders are in a severely disadvantaged position.

You Pay premium but Aviva may not pay when you send in claim

Even if one signed up with Aviva in good faith, not hiding any knowledge of any pre-existing medical conditions, Aviva can refuse to pay.

This is preposterous as even now, the body of knowledge about the Causes ( etiology) of Cancer is still very rudimentary. The theories of Cancer include, genetic predisposition,viral,environmental plus plus. ( a lot of time they mean "I don't know")

When a patient (let’s call him Joe) consults his regular doctor ( let’s call him Dr.Good) today (5th Feb 07), not even the most expensive test in the world, can say with 100% certainty that Joe does not have any cancer cells in his body.

Assuming Joe says, “Dr.Good, I am interested in buying insurance next week and I want to be sure that I am fit and have no pre-existant illnesses so as not to be accused of defrauding the insurance industry. Can you help me?”

Dr.Good, who is friendly and methodical ( but sensible and prudent), says,” Of course I can. Do you have any illnesses like hypertension, diabetes, history of family illnesses etc etc)
Because I am a good doctor, I will send some blood specimens for baselines checks and do an ECG.

BTW,I don’t think you need the expensive PET scan. Anyway, the Minnistry of Health, advises against using PET Scans as a screening tool unless absolutely warranted”

As expected, Joe passes the tests with flying colours and happily signs up with Aviva the next week. ( Boy- is Joe in for a surprise!!)

If 6 month’s later, Joe goes to see an ENT Surgeon, lets call him Dr.Me, and is diagnosed with early nose cancer and requires radiotherapy etc, Aviva can refuse to pay, citing the possibility of pre-existing cancer when Joe signed up.

It matters not that Joe and Dr.Good had vouched that they thought Joe was clear of cancer on the 5th Feb 07.

Even Dr. Me on the day of diagnosis cannot be certain at all how long the tumour had been there. It is all just guesswork and conjecture on the doctors’ part.

Now, Aviva is in a very enviable position.

If it does not want to pay- based on whatever reason, it can just get opinions from doctors and then use these opinions (and I remind you that these are just opinions ), to avoid the responsibility of paying! Some specialist on Aviva's panel- if forced to commit, could have said that " it is not inconceivable that some cancer cells could have existed prior to Feb 07" or something to that effect.

Have the cake and eat it! How nice and convenient!


Salma Khalick agrees with Aviva!??

(ST: 5th Feb 07) Salma Khalik: Aviva did the right thing in rejecting cancer claim- ( read here for article)

In my opinion ( yes that word again), Aviva is wrong. Salma is just as wrong to sanction Aviva’s actions.

She mentions motherhood truths about why buying insurance early is better and why one should be responsible for one’s own healths etc. What has all that to do with Ms Vaz’s case?

Ms Vaz, bought insurance which she thought would help her when she contracts some dreaded illness later on. It is a tragedy that she finds herself with an unexpected cancer.

The sense of tragedy is compounded now that Aviva has found some excuse not to fulfil its obligations.

Any action from anyone?

Some regulatory bodies and consumer advocacy groups should be looking into this!

I will be buying magnifying lens to pour over the fine prints in my insurance policies!

Dr.Huang Shoou Chyuan