Insurance broker Peter Taylor was ordered to repay income protection insurance payments totalling $371,200 after the High Court ruled bone cancer did not affect his income.
Mr Taylor set up business in Dunedin, taking out income protection insurance in 1994. He claimed after a bone cancer diagnosis in 2009. His claim was accepted, with regular payments made of some $6000 monthly. He was required to make periodic reports to insurer Asteron: statements as to his ongoing medical condition and details of current income. The content of these reports came in for minute examination in the High Court. Accepting that Mr Taylor had been affected by radiation treatment for his bone cancer and subsequent surgery, Justice Cooke ruled that his illness had not affected his income in a way covered by the Asteron policy.
Mr Taylor told the court he had been incapacitated by illness and was able to work no more than a few hours per day. Income levels dropped drastically he said; his business ran at a loss. Evidence indicated otherwise. When making periodic reports, Mr Taylor did not act in good faith, Justice Cooke ruled. Staff told of Mr Taylor still ‘having his finger on the button’. He attended regularly at the office, and when absent kept in constant touch with staff and clients by phone and email. Mr Taylor did not disclose to Asteron income generated by staff or trailing commissions received on cover written in prior years. When Asteron questioned income levels, Mr Taylor produced financial statements for the business which proved to be misleading. Justice Cooke ruled wording of the income protection policy provided cover for a fall in business net profit, based on income generated by Mr Taylor personally or his staff. Asteron was justified in cancelling the income protection cover and recovering all payments made. Mr Taylor was never entitled to payment in the first place.
Justice Cooke rejected Mr Taylor’s claim he keep payments received because he had ‘changed his position’. Building a $700,000 house at Karitane on the Otago coast and buying two Mercedes motor vehicles at a combined cost of $379,500 could not be considered purchases made purely as a consequence of receiving a monthly insurance payout of $6000, Justice Cooke said.
Taylor v. Asteron Life Ltd – High Court (7.05.19)
19.084