• AFRM

Claims Case Study:


Originally Published on 7 September 2020

“It’s a fact that with old contracts, there are times when the insurer’s own claim managers do not understand how the contracts work.
“They simply default to interpretations based upon current policy definitions, which may be disadvantageous to the client on claim.”

The relationships AFRM has with our mutual and other clients are long-term – often for decades.

A case in point is Ben [name changed to protect client privacy].


Ben first became a client of AFRM back in the early 2000s when he was in his early 30s. He had an equally young wife and a one-year-old child.


Ben was a highly qualified young professional working in the mining survey field. His role routinely required him to go on scientific field expeditions to remote parts of the country. He was a very fit and active sportsman, so roughing it in the outback was no great challenge.


For years now, AFRM’s slogan has been:

“Protecting your tomorrow today.”

Those words are incredibly apt for this case study.


AFRM co-founder and recently retired Managing Director, Nick Hatherly, reviewed Ben and his young family’s circumstances and provided recommendations on a financial risk management strategy in late 2007, after a referral from his accountant.


By mid-2008, Ben had two insurance policies in place:

  • Income Protection (IP) that would provide about $3,000 per month through to the age of 65.

  • Term Life with Total and Permanent Disability (TPD) and Trauma cover: with benefit of approximately $200,000 in the event of his death; $100,000 in the event of TPD and Trauma. Significantly, thanks to AFRM’s advice, Ben had “Own Occupation” TPD cover.

The financial future looked rosy for this young family.


Then one day in December 2008 as Ben was driving in traffic, totally out of the blue, the car he was driving was ‘T-Boned’ by an unlicensed driver in an unregistered car.

Ben suffered catastrophic injuries to the right side of his body including a shattered pelvis and brain injury.


So severe were his injuries that Ben was put into an induced coma for weeks and remained in hospital for about six months.


To this day, some 12 years later, Ben continues to be on the IP claim filed on his behalf by AFRM.


Throughout this period, AFRM adviser, Phil Hatherly, has continued to work on Ben’s claim as his situation has evolved and ongoing negotiations were required with the relevant insurer. Following, we will attempt to summarise what has actually been years of intermittent negotiations.


Following the accident, when Ben finally got back to work, he was suffering chronic pain, memory loss and impaired freedom of movement that rendered him unable to perform at his pre-accident level. He started slowly – a day and a half a week then gradually moved up to 20 hours a week.


For the next three years Ben tried to maintain his original work role, including the rough field trips which became absolute hell.

As he was now working part time, his IP claim was on a Partial Disability basis, the benefit based upon the loss of income compared to what he was earning before the accident.


Ben eventually accepted he simply was not capable of performing his original role in the same way as he could prior to his accident, so he resigned to take up an office-bound role at significantly lower pay.


AFRM successfully negotiated with the insurer to continue to pay Ben’s Partial Disability claim benefits on the grounds that the change of job was driven by Ben’s medical and physical impairment caused by the car accident.


A year or so later, 2012/13, the relationship with the insurers became challenging yet again when Ben finally received a modest personal injury compensation payment under the NSW Compulsory Third Party (CTP) scheme.


The delay in payment had been caused by the CTP insurer handling Ben’s claim repeatedly challenging Ben’s level of permanent injury caused by the accident, even though Ben had ultimately had to have a hip replacement and had an overwhelming weight of supporting medical evidence stating his impairment was permanent and was caused by the accident.


AFRM was not involved in that process but did get involved to advocate on Ben’s behalf when his IP insurer advised its intention to ‘claw back’ a significant amount of Ben’s IP claim payments.


The insurer’s argument was based on an “offset clause” they maintained was in Ben’s contract that allegedly stated any lump sum compensation for loss of income would be treated as income received over a set period, hence it would be offset against IP benefit payments paid by the insurer.


AFRM’s Phil Hatherly successfully argued on Ben’s behalf that the original policy document issued in 2008 had no such offset clause in it. The clause had in fact been introduced in later versions of IP insurance product.


This successful negotiation by AFRM took months to settle but the insurer finally accepted this, and no claw back occurred.


Ben has since been classed as a “permanent long-term claim” meaning the burden of providing documented medical evidence of his impairment on a monthly basis was eased dramatically and his Partial Disability claim benefits continue to this day - 12 years later.


AFRM’s, Phil Hatherly, said our company’s long-term knowledge and experience sometimes gives it an edge when negotiating with insurers.

“Ben’s story is a testament to our skills of long-term claim management,” Phil said.
“It’s a fact that with old contracts, there are times when the insurer’s own claim managers do not understand how the contracts work. They simply default to interpretations based upon current policy definitions, which may be disadvantageous to the client on claim.”

Thanks to AFRM’s advocacy on Ben’s behalf, he enjoyed a smooth transition of his claim through a change of occupation, an unsuccessful attempt by the insurer to claw back benefit payments in the wake of a CTP compensation payment, and a transition to long-term claim status resulting in a significant reduction of ongoing medical documentation requirements.


That’s how willing AFRM is to stand by our clients and protect their best interests for the long-term.

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