An insurer was right to reject a trauma claim from a woman with interstitial lung disease because her condition did not meet its policy definition, the industry ombudsman has ruled.

AIA Australia did not mislead the complainant about its policy, the Australian Financial Complaints Authority also finds. Terms of cover were sufficiently described in the policy and the woman and her financial adviser were notified of an updated definition.

The policy began in 2015, and in 2020 its definition of chronic lung disease was updated to be “end stage respiratory failure requiring permanent, long-term oxygen therapy as certified by the relevant medical specialist”.

The woman lodged her trauma claim in May 2023, providing a medical certificate from a respiratory specialist saying she had chronic lung disease but was not suffering end stage respiratory failure.

AIA’s medical officer found the woman had a chronic lung condition but was undergoing treatment, with some improvement expected, which indicated the condition was not considered end stage and irreversible.

In ruling against the woman, AFCA says no medical specialist said she had end stage respiratory failure.

Although her specialist said in April 2023 that she required continuous permanent oxygen treatment, by October 2023 he found she no longer needed supplemental oxygen therapy.

See the ruling here.