What is a Procedural Fairness Letter?
When an Insurer intends on declining your Total and Permanent Disablement (“TPD”) or Income Protection (“IP”), they will send you a Procedural Fairness letter.
Procedural Fairness letters will be sent to you prior to an adverse decision being made on your claim. The purpose of this letter is to:
1. Provide you with copies of all of the evidence relied upon in the assessment of your claim;
2. Having regard to the available evidence, clearly set out the potential barriers to your claim; and
3. Provide you with the opportunity to comment or provide further evidence to support your claim.
It is important to note that receiving a Procedural Fairness letter does not mean that your claim has been denied. Rather, it means that the Insurer has treated the material before them as unfavourable to you and based on this, they are looking to decline your claim.
Why are Procedural Fairness letters important?
The concept of Procedural Fairness has stemmed from the Courts when determining Total and Permanent Disablement (“TPD”) cases.
In a TPD claim, when an Insurer’s decision is challenged, the Court must first consider whether or not the decision was reasonable. If the Court finds that the Insurer’s decision was not reasonably made, then the Insurer’s decision can be set aside.
In circumstances where you are issued with a Procedural Fairness letter, you have the right to correct any errors that the Insurer may have made in the assessment of your claim. This includes – but is not limited to – you explaining to the Insurer why they have formed their opinion on an irrelevant consideration, or simply providing them with additional information to consider before they reach a decision.
The failure to provide you with a Procedural Fairness letter, or to not properly address the potential barriers to your claim, has resulted in Insurers being heavily criticised by the Courts. This has frequently resulted in the Courts finding that the Trustee and Insurer have not complied with the obligations to act with the utmost good faith.
What should you do when you receive a Procedural Fairness letter?
If you have received a Procedural Fairness letter, you should obtain legal advice as soon as possible.
Procedural Fairness letters usually have a set timeframe in which you are required to respond – this is usually 28 days. An extension of time can also be requested of the Insurer, particularly in circumstances where further evidence must be obtained before a response can be submitted.
The failure to respond to a Procedural Fairness letter can result in your claim being denied.
Receiving a Procedural Fairness letter does not necessarily mean that your claim is not valid or that you are not entitled to receive an insurance benefit. Whilst it may seem that Insurers are trying to be “fair” to you before making a determination on your claim, this is not always the case.
A response to a Procedural Fairness letter should be done in a meaningful way. The reasons for which the Insurer intends to reject your claim may not always be straightforward and should always be reviewed by a legal expert in accordance with the Insurance Policy.
At Zaparas Lawyers, we have extensive experience in managing TPD claims and responding to Procedural Fairness letters. Get in touch today to see how we can help you.