According to the Insurance Claims Complaints Bureau, the number of medical claims complaint cases doubled to 120 in 2007. The majority of these disputes were related to non-disclosure of the insured’s medical history.

What follows is an example quoted from The Insurance Claims Complaints Bureau:

Ms. Lam declared that her health condition was good, so the insurance company accepted Ms. Lam's application of medical insurance at the standard premium rate. Fifteen months later, Ms. Lam was hospitalised with cancer in the oesophagus. However, her hospitalisation claim was rejected by the insurance company on the grounds that she had not disclosed her Hepatitis B carrier status. Ms. Lam admitted that she was aware of being a Hepatitis B carrier when applying for the insurance plan, but she was dissatisfied with the decision of the insurance company as there was no medical evidence associating cancer in the oesophagus with Hepatitis B, and that being a Hepatitis B carrier was common in Hong Kong.

The Complaints Panel reviewed Ms. Lam’s application form and noticed one of the questions was “Have you ever had, suffered from or been treated for or been told you had …Hepatitis B …?”. Ms. Lam's answer was “No”. Although there was no direct relation between the medical history of a Hepatitis B carrier and the hospitalisation claim for cancer in the oesophagus, the Complaints Panel took the view that the fact which Ms. Lam did not disclose was material, as it would have affected the insurance company's underwriting decision in charging a standard premium rate. Therefore, it upheld the insurance company's decision in rejecting the hospitalisation claim.

The fact is that all insurance contracts are based on trust. The insurance company trusts the insured to give precise and true details of the subject matter to be insured. This is called the principle of Utmost Good Faith. Non-disclosure of details violates this principle.

In order to avoid disputes, you should remind your customers of the following:

1. Disclose fully and accurately all information in the application form
2. If in doubt as to whether a fact is material, it is better to disclose it
3. Even though a medical check-up report is provided, the insured still needs to disclose his/her medical history
4. If the insured answers “Yes” to any of the questions, he/she has to give full details, including:
   • Name of insured (if more than 1)
   • Date of onset
   • Diagnosis
   • Existing condition
   • Treatment/medication/investigation/operation
   • Date of last consultation or treatment, together with name, address and telephone number of attending doctor

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