Upheld: claim rejection / policy coverage dispute complaint against AMERICAN INTERNATIONAL GROUP UK LIMITED

Decision detail

Summary

Mrs L claimed on her Surgery Cash Policy for cardiac surgery procedure K2581, but AIG rejected the claim because the policy only covered procedure K2580. After Mrs L appealed with evidence from her surgeon confirming the procedures were clinically equivalent, AIG agreed to settle the claim on an exceptional basis. The ombudsman upheld the complaint, finding AIG's settlement offer fair and reasonable despite the initial contractual entitlement to reject the claim. No additional compensation or interest was awarded as AIG had already fairly stepped away from strict policy application.

The Ombudsman's reasoning

While AIG was contractually entitled to reject the claim based on the specific procedure code not being listed in the policy terms, the ombudsman found it fair and reasonable for AIG to depart from strict policy application given the clinical equivalence of the procedures, Mrs L's specific circumstances, and vulnerabilities. The ombudsman considered regulatory rules requiring insurers to handle claims promptly and fairly and not turn down claims unreasonably. AIG's decision to settle the claim on an exceptional basis was deemed a very fair offer that took pragmatic steps to resolve the matter. No compensation was warranted because AIG had already fairly stepped away from the contract terms.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website