Medical insurance


As mentioned in the previous section, insurance contracts are based on trust. The nature of the subject matter of insurance and the circumstances pertaining to it are facts within the knowledge of the policyholders. Insurers, on the other hand, are not aware of these facts unless the policyholders tell them. The policyholders must tell the whole truth.

Non-disclosure arises when an applicant for an insurance policy fails to disclose on the application form material facts within his/her actual or presumed knowledge. It should be noted that the information given by an applicant in the application form has great impact on the insurer's underwriting assessment. From the information given in the application form, the insurer can identify high-risk features and decide whether or not to take on the risk, and if it decides to do so, at what premium and on what terms.

It is important to note that the majority of non-disclosure disputes are related to the medical history of the policyholders. Non-disclosure can result in policy repudiation and claim rejection.

Although the majority of non-disclosure disputes arise from the policyholders’ failure to disclose fully their previous medical history, material information is not only restricted to their medical records. Other information, such as their history of past claims, average length of stay outside Hong Kong, smoking and drinking habits, previous traffic offences, and occupation, may also affect an insurer's decision in setting the premium or determining whether or not to underwrite the risk.

If the non-disclosed information is material enough to affect the underwriting decision of an insurer, it may be legitimate for the insurer to decline a claim even though the non-disclosed information is not related to the current illness. This is because the non-disclosure prejudices the insurer from making a fair and accurate underwriting assessment, and thus it may justify the insurer’s repudiation of the contract from inception.

You should not rely solely on your insurance agent to determine whether or not a piece of information is material. In order to avoid unnecessary claims disputes, you should disclose all information and all material facts fully and accurately when filling in the application form. If in doubt as to whether a fact is material, it is better to disclose it.