An auto mechanic who suffered serious injuries in a 2006 car accident has won a dispute over a denied total and permanent disablement (TPD) insurance claim, with the Australian Financial Complaints Authority (AFCA) finding in his favour and ordering Zurich Australia Limited to pay the benefit with interest.
The complainant, who had been insured through a superannuation policy taken out by the fund’s trustee, lodged a TPD claim in 2016. The claim was based on physical injuries to his left knee and foot, as well as post-traumatic stress disorder, anxiety, and depression that rendered him unable to work since the accident.
Zurich rejected the claim in December 2016, arguing the complainant retained the capacity to work in certain sedentary roles aligned with his education, training, and experience (ETE). When the trustee challenged the decision in 2017, the insurer again rejected the claim, maintaining that his mental health conditions were irrelevant to its original assessment.
AFCA disagreed, concluding the complainant met the TPD definition by April 4, 2007—the end of the six-month qualifying period following the accident. The authority found that he was unlikely to ever work again in a role suited to his background.
“A fair reading of the evidence before AFCA is that, as at the end of the 6-month period on 4 April 2007, the complainant was unlikely to ever be able to engage in any occupation for which he was reasonably suited by his ETE,” the decision stated.
Medical evidence from several occupational physicians pointed to permanent restrictions, including the inability to kneel, squat, or bear weight effectively on one leg. Although Zurich pointed to alternative jobs such as courier driver, service adviser, or spare parts interpreter, AFCA found these options either unrealistic, unsupported by the man’s past experience, or incompatible with his physical limitations.
“The insurer denied the complainant’s TPD claim without fairly considering the ‘real world’ likelihood of the complainant ever engaging in suitable employment,” the decision stated.
AFCA also criticised Zurich for failing to consider important “longitudinal” evidence—such as the complainant’s failed return-to-work efforts, his continued reliance on disability support, and the worsening of his condition over time.
As a result, Zurich has been directed to pay the TPD benefit to the super fund trustee within 14 days of the complainant accepting the outcome. Interest must also be paid from March 28, 2017, in line with section 57 of the Insurance Contracts Act 1986.
