‘Risked health to reduce costs’: Sick Kiwi traveller wins payout from insurer

A Kiwi traveller who became seriously ill overseas and needed a companion to fly home has been awarded $5000 compensation after her travel insurer’s actions “risked” her health “in order to reduce costs”.

Cara* was travelling in Bali when she fell ill and was unable to return to New Zealand as planned.

She was advised by two doctors that she would need a travel companion to be able to fly home and Air New Zealand’s medical team said she would need a nurse or doctor as a medical escort.

However, a representative on the insurer’s emergency service phone line told Cara she would not be covered for medical escort costs and said she was fit to travel without one.

Because Air New Zealand would not allow Cara to fly unless she had a medical escort, the insurer suggested she book with another airline without telling it about her medical conditions.

Cara had originally booked an Air New Zealand Economy Skycouch so she could lie flat, but was told by the insurer that business class with another airline was a suitable alternative and gave her details of a flight it could book.

The insurer said it would cover only her seat, not a travel companion’s.

Cara asked a friend, a former paramedic, to travel to Bali and help her get home. She booked a cheaper business-class flight for them both.

During the flight to Sydney, Cara had a medical emergency and was admitted to hospital on arrival. She then had to book new flights home to New Zealand for herself and her friend.

After getting home, Cara made a claim to the insurer for her additional travel, accommodation and medical costs, including her travel companion’s flights.

Her claim was only partially accepted. The insurer paid Cara an amount equivalent to an Economy Skycouch seat but declined the full cost of her business-class flights and all her travel companion’s flights.

It also only paid half the expenses it considered shared, and didn’t pay for the rebooked flights from Sydney.

Cara made a complaint to the Insurance & Financial Services Ombudsman Scheme (IFSO Scheme), which was upheld.

The IFSO Scheme found the insurer’s conduct went beyond failing to treat Cara fairly and supported a finding that it had acted in bad faith.

It also found the insurer had materially breached its fair conduct obligations under the Financial Markets Conduct Act 2013 and failed to provide its service with reasonable care and skill under the Consumer Guarantees Act 1993.

“When someone is seriously ill overseas, they need clear information and practical support from their insurer,” IFSO Ombudsman Karen Stevens said.

“We were seriously concerned that after Air New Zealand said Cara needed a medical escort, the insurer suggested she use another airline without telling it about her medical conditions.

“This directly risked Cara’s health in order to reduce costs.”

The insurer was required to pay the travel companion and business-class travel costs, as well as $5000 for the special inconvenience caused by its handling of the claim.

*Name changed to protect identity.