A policyholder with a history of backaches was misled when he bought income protection and total and permanent disability covers in 2019, the industry ombudsman has ruled.

The man, who bought the insurance through his mortgage broker, was unhappy that Nippon Life imposed a back exclusion at the start of the policies.

He provided further information in bid to have the exclusion removed but the insurer refused.

In an email exchange in February 2019, Nippon Life was asked if the exclusion could be reviewed in 12-24 months if the pain stopped. The insurer replied it would “be happy to review” the terms if the policyholder was treatment-free and displayed no symptoms for two years.

In another email, the insurer was asked to confirm the full spine exclusion would be reviewed in two years pending no further symptoms, and its reply was: “Yes we can certainly look to review the exclusion once [he] is completely treatment- and symptom-free from any back pain for two years.”

In 2022, the policyholder applied to have the exclusion removed but was unsuccessful.

He said he had met the requirements, but Nippon Life countered it had promised only to review the exclusion if certain conditions were met – not that it would be removed.

In a dispute ruling, the Australian Financial Complaints Authority has sided with the policyholder.

“When the complainant bought the policies, the insurer misled him to believe that if he had no symptoms or treatment for two years the exclusion would likely be removed,” the authority ruled.

“The complainant would not have bought the policies if he was not misled, but he may now want to keep the policies.”

The authority says the complainant can cancel the policies and receive a full refund of all premiums, or the insurer must review the exclusion.

See the ruling here.