Ingram v QBE Insurance (Australia) Ltd: When reliance on a policy exclusion breaches equal opportunity laws

Belinda_RandallInsurers wishing to rely on certain exclusions in policies may need to prove that related denials of cover are in fact based on actuarial or statistical data and do not violate any discrimination law principles.

Described as a ‘game changer’ at the General Insurance Open Forum on 16 March 2016 by John Price, Lead Ombudsman (General Insurance) of the Financial Ombudsman Service (FOS), the Ingram v QBE [2015] VCAT 1936 decision in the Human Rights List at VCAT found that QBE had breached the Equal Opportunity Act 2010 (Vic) (Act) by denying coverage to Ms Ingram on the basis of her disability.

Ms Ingram had booked a school trip to New York City but due to concerns for her health she did not go. After the travel insurance policy had been purchased, she was diagnosed with depression for the first time. She made a claim to QBE to recover the cost of the trip. QBE denied cover under a broad mental illness exclusion in the policy. Ms Ingram made a successful claim at VCAT that QBE had refused to supply her goods and services on the basis of her disability, in breach of the Act. The definition of disability in the Act encompasses future disabilities.

QBE raised the defence (contained in s 47(1)(b)(i) of the Act) that it was reasonable to deny cover on the basis of the exclusion, having regard to actuarial and statistical modeling that showed a high correlation of travel cancellations with people who suffer mental illness. However, QBE could not produce data that it had relied on to draft the policy and to deny Ms Ingram’s claim. It was this failure to produce the data that led to a finding of unlawful discrimination against QBE.

Whilst the VCAT decision does not apply beyond the specific facts of the case, it serves as a reminder that the onus is on insurers (in defending denials of indemnity based on policy exclusions) to show that any relevant statutory exceptions apply and to produce relevant substantiating information. Flashlight is not aware of any appeal of the decision.

This blog was authored by DLA Piper graduate solicitor Grace Duncan.