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Issue 15 - Spring 2013

Key Determinations


In August 2013 we issued a Determination regarding an insurance claim under a personal accident and sickness policy. Of interest was the application of the phrase 'accident' to the facts of this dispute.

The insured person had died, and the applicant was acting on behalf of the deceased estate. The claim was for the ‘accidental loss of life’ benefit under the policy. The insured person had passed away on 20 August 2011 after having surgery the previous day. According to the applicant, the death was caused by haemorrhaging from the portal vein which was cut during the surgery.

The FSP denied the claim on the basis that the death was not accidentally caused. The policy required the death to have occurred as a result of an “Accidental Injury”, which the FSP considered was a bodily injury resulting from an accident.

A FOS Panel considered the dispute. When interpreting this policy provision, the Panel found the term “accident” was something “unintended and unexpected”. This interpretation is consistent with the construction adopted by numerous court decisions.

With respect to whether the accident was “unintended”, the Panel accepted the haemorrhaging of the portal vein was not intentional, but rather was an understandable complication of the surgery.

However, when considering the term “unexpected”, the Panel found this required an event that was not anticipated or was not likely to happen in the ordinary course of events. In this context, and given the circumstances, the Panel was not satisfied the incident was “unexpected” because:

  • It was clear the surgical procedure involved significant risk.
  • It was a risk anticipated by the attending surgeon.
  • The attending surgeon had communicated this risk to the insured person before the surgery.
  • The risk was accepted by the insured person when instructing the surgeon to proceed with the surgery.

The Panel concluded that as the risk was not unexpected to the insured person, the relevant criteria of the insured event had not been met. The FSP was therefore entitled to deny the claim.

In arriving at this decision, the Panel emphasised that the outcome was specific to these particular facts. The Panel also took the opportunity to express its disagreement with the following global arguments advocated by the FSP:

  • That major elective surgery cannot be construed as bodily injury resulting from an accident (the Panel considered it could be construed as such).
  • That the type of surgery involved in this dispute cannot be caused by violent external and visible means as it was internal surgery (the Panel considered that a surgeon’s use of a scalpel fits this definition).

You can read the whole Determination here.