In the July 2001 edition of ombudsman news, we asked for readers' views on who should pay for medical reports. We set out the general issues that commonly arise in the disputes we consider, and we gave examples of cases where we had seen different positions taken by insurers.
We have been considering the matter in the light of readers' responses and the cases that we have decided. As always, our first consideration must be what would be fair and reasonable in the particular circumstances of the case. However, it is now possible to identify some general themes that we expect to use in future decisions, unless the particular circumstances of the case clearly suggest another approach would be more appropriate.
First, we recognise that insurers may reasonably require medical reports and other medical evidence about policyholders to be provided. However, as a number of respondents pointed out, obtaining reports can place burdens on doctors and policyholders. Inevitably, hard-pressed doctors will not give a high priority to completing reports for insurance purposes. Delays in obtaining reports can therefore be expected. We would want to see this reflected by firms in their own procedures. Medical reports should only be requested where there is a clear need to confirm the evidence provided by the policyholder.
A number of respondents suggested that market practice was changing and that - increasingly - insurers are meeting the costs of medical reports where they settle claims. This brings medical reports into line with other expert evidence obtained during claims (for example engineers' reports on vehicle condition or surveyors' reports on subsidence claims) and now appears to represent good market practice. If an insurer has paid for a report, then it is the insurer's property and within its control. The insurer is thus in a position to decide precisely what further questions need to be answered and it can usually act more quickly.
So our general approach will therefore be to presume that - generally - firms should meet the cost of medical reports wherever the customer consents to the report being released to the firm. However, it seems reasonable for a firm to require a policyholder to pay for any medical report that is required primarily to prove that a claim is valid, (whether when the claim is first made, or on a continuing basis). Thus, even if some claim payments have been made, the responsibility rests with policyholders to provide the firm with any evidence it reasonably requires to demonstrate they have a valid on-going claim. If that claim is successful, however, then we would expect the insurer to reimburse the cost of such report(s).
We also note that insurers' requirements for regular reports about largely stable conditions may place a significant burden on policyholders (and their medical advisers). For example, the costs to the policyholder (both direct and indirect) of a monthly check-up and report may outweigh the benefit under some loan protection policies (even if the firm subsequently reimburses some of the costs). A firm's requirement that a policyholder should obtain numerous reports for low value, on-going claims may - of itself - be onerous.
When a firm is handling cases, we expect it to meet the cost of obtaining information about whether a claim is excluded by the policy terms. If, in reaching a decision on a complaint, the firm plans to rely on one of the policy exclusions (such as pre-existing medical conditions), or on the fact that the policyholder failed to disclose a relevant matter, then the burden of establishing that rests with the insurer, not the policyholder. We expect such cases to be handled sensitively and expeditiously. There is a particular need to resolve matters quickly where the policyholder is being treated for illness abroad.
There is a further situation where medical evidence may be required. Where claims are rejected or terminated on reasonable grounds, then it is for policyholders to produce any new medical evidence that could support their appeal against that decision. If they succeed in establishing that their claim is valid, we would expect the firm to reimburse that cost in full.
ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.
The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.