In TPD claims, insurers would often generate a “procedural fairness” letter prior to declining a claim. This letter notifies the intent to decline a claim and invites you to provide a response within a limited time. These letter are not necessarily fair and the reason that an insurance company generates such a letter is because they have been penalised by the court in the past.
In the case of Sayseng ats Hannover, where the insurer had rejected Mr Sayseng’s claim without allowing him the opportunity to respond, His Honour Justice Bryson said:
I would not suppose that… as a matter of fairness be passed on to the claimant for an opportunity to answer by comment or to answer by submission of some further material.
In light of what His Honour many insurers now generate the Procedural Fairness letter to avoid being criticised.
However the mere fact there is a Procedural Fairness letter does not make it fair. The Insurer is required to deal with people fairly. For example in a recent decision of Shuetrim ats Metlife His Honour Justice Stevenson commented:
Although [it is] evidently intended to afford procedural fairness … it hardly did so. The letter did no more than identify the material exchanged between the parties … and invited submissions … [The letter] did not notify … any matter that [the Insurer] considered to be adverse to [the] claim, or of any issues [the insurer] considered required clarification.
In that it was determined that the Insurer was unreasonable even though they had sent a Procedural Fairness letter.
An Insurer has a duty of good faith to its policyholders, and this should be the case even when they intend to deny the claim. A procedural letter is to anticipate a declinature and notify the person making the claim. This allows the person to respond. If the reasoning is completely unreasonable it would allow the claimant to sue the insurer at the Supreme Court.
Gerard Malouf & Partners has successfully conducted many TPD and IP claims and if you have made a recent claim and have received a Procedural Fairness letter or want to seek advice please do not hesitate to contact us for free consultation, and allow us to assist you in achieving your claim.