Norwich Union study identifies the top reasons for non-disclosure

Article date: 11 December 2006

Norwich Union is warning that too many people are risking theirfamilies’ financial security by not completing applicationforms fully and accurately. Failing to disclose all information canlead to a claim being rejected.

A study* by Norwich Union, the UK’s largest insurer,identifies the five main conditions that people fail to disclosurewhen completing insurance application forms. They are:

  • Received treatment (including investigations, tests, scans, orx-rays) for multiple sclerosis, double vision, numbness orgiddiness**
  • Receiving current medical treatment or attention or awaiting amedical consultation, test or investigation or result thereof
  • Smoking status, alcohol consumption or advised to reducealcohol consumption
  • Whether they have had episodes of depression
  • Customer has received any treatment in the previous 12months

A common myth is that an insurer will automatically get fullmedical records when a policy is taken out. However, insurers relyon applicants to share all the information they are asked for asthey are the only person who has all the requiredinformation.

Insurers refer only to previous medical history at the time a claimis made, or if an application form highlights something theyrequire more information about before underwriting thepolicy.

To screen all applications up front would massively increase thecost of a policy and place an unacceptable burden on the NationalHealth Service.

Tony Jupp, chief underwriter at Norwich Union, said: “Therole of a life insurer is to help families if a breadwinner dies orsuffers from a critical illness, but in order to do this we needapplicants to help us help them.

“It is vital that people take a great deal of care andattention when completing these forms as the information theyprovide will form the basis of any life policy that they areoffered. If applicants don’t share with their insurerinformation that is requested, it is likely that they will haveinvalidated their policy and if they make a claim, it might beturned down.

“If this happens, then not only is a customer denied theirclaim, as it isn’t valid, but they would find it harder toarrange alternative cover from another provider given the change ofhealth which resulted in them making the claim.

“We do request permission to access customers’ medicalrecords on the application form, but this is to allow us to seekadditional information if their responses point to something werequire more information about before underwriting thepolicy.”

In the event of a claim being denied because of non-disclosure,industry practice is to return the paid premiums, setting both theindividual and the company back in the position they began inbefore the contract was issued on an incorrect basis.

In 2005, Norwich Union declined 12% of critical illness claims as aresult of non-disclosure, down from 13% in 2004.

Norwich Union includes an information sheet highlighting thedangers of non-disclosure in all information packs about lifepolicies.


Notes to editors:
* Study is based on non-disclosure cases received by Norwich Unionin the first half of 2006.
** This relates to symptoms which have received medical attentionrather than a passing case of pins and needles for example.

Press office contacts:
Robert Pell 01904 452659 Out of hours 07800 699563
Louise Soulsby 01904 452617 Out of hours 07800 699526

About Norwich Union
Norwich Union is the UK’s largest insurer. It is a leadingprovider of life, pensions and investment products and one of thelargest Financial Adviser (FA) providers. FAs provide over 70% ofthe company's long-term savings business in the UK.

Norwich Union is the UK’s largest general insurer with amarket share of around 14%, with a focus on insurance forindividuals and small businesses.

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