Mr Bjorn Sorensen, aged 55, insured his own life for $1.75 million two years ago with Bangaroo Insurance Ltd. He also has a policy of comprehensive motor vehicle insurance for his Mercedes Benz vehicle and a home owner’s insurance policy with the same company. Mr Sorensen plays tennis on Saturday afternoons and works out in his home gym several days each week. Although he eats a fairly well-balanced diet, he has a "sweet tooth" and loves to indulge in pies and pastries. His mother, Molly, often worries about his love of sweet food as she developed Type II diabetes, at a relatively young age, due to similar eating habits. Further, Mr Sorensen’s father died at age 70 of a heart attack.
Recently, Mr Sorensen has been suffering from gastrointestinal upsets and mild pain in his left arm, but has been so busy at work that he decided to wait until his workload eases up before he has a full medical. During a game of pairs tennis on 15 May 2022, he suffered a massive heart attack and died before the paramedics arrived. Mrs Agnetha Sorensen, Bjorn’s wife, wishes to make a claim on her husband's policy. Agnetha has been a housewife for the past 20 years and does not have savings or superannuation of her own. She assumed that the insurer would pay the claim quickly, but they have written to her denying liability. The application form required the insured to answer yes or no to relevant health history. Bjorn failed to indicate his parents’ history of diabetes (on his mother’s side) and heart attack (on his father’s side).
Question (a) Bangaroo Insurance Ltd has assessed the policy and death certificate and determined that his beneficiary, Mrs Sorensen, is not entitled to the sum insured due to non-disclosure by the insured. Explain whether Bangaroo Insurance Ltd has valid grounds on which to deny the claim.
Question (b) Following the denial of the insurance claim, Mrs Sorensen seeks your advice on what steps she can take to have their decision reviewed. In your advice to Mr Sorensen, explain AFCA’s role in handling insurance reviews and complaints.
Question (c) Assume that instead of dying of a heart attack, Mr Sorensen was involved in a car accident on the way home from playing tennis. He was uninjured, however, the car was a complete write-off. The car accident was caused by the negligent driving of Elise Mellows.
