During July - August 2013, the Israeli Commissioner of Insurance issued three new guidelines:
- Regarding a policy for serious illnesses
- In respect of the limitation period in an insurance contract which includes coverage for disability
- Guidelines for drafting an insurance programme .
Please find herewith details regarding the said guidelines:
Policy for Serious Illnesses:
Insurance programme against serious illnesses which is intended to provide insureds with an agreed amount if it is found that they suffer from a serious illness:
During 2003 the Commissioner issued guidelines regarding the illnesses/medical procedures which should be included in the above mentioned insurance. As medical science has progressed since said date resulting in new medications, the Commissioner finds it necessary to periodically update the list of illnesses/medical procedures within the current guidelines.
Based on the new guidelines, insurance for serious illnesses/medical procedures will cover discovery of at least the following: cancer, stroke, multiple sclerosis, myocardial infraction, heart valve surgery, heart bypass surgery, aortic surgery, and cardiomyopathy.
An insurer is obliged to check the list of illnesses/medical procedures at least once every 3 years and update same taking into account the common severe events resulting from the above mentioned illnesses.
Limitation period in life and disability policies:
According to Section 31 of the Insurance Contract Law, 1981 the limitation period in respect of claims for insurance benefits is three years from the date of the insured event. Many judgments discussed the question "what is the insured event?" in case of a claim for insurance benefits due to the insured's permanent disability, i.e. what is the inception date of the limitation period.
In C.A. 1806/05 Harel Insurance Co. v. the Estate of the late Mr. Amitay, the Court determined that the inception date is the date of the accident.
According to the Commissioner, determining the date of the accident as the inception date might be problematic since the insured's medical condition is usually unstable for a lengthy period or alternatively, the discussion regarding the quantum of disability is ongoing for a long time. In these events, the three year limitation period may be insufficient. The Commissioner therefore wishes to set guidelines for a proper disclosure by the Insurer in respect of the limitation period and for handling requests for an extension of the limitation period.
According to the guidelines, the insurer must agree to an insured's request to extend the limitation period for at least an additional two years over and above the three years granted by the law under the following circumstances:
(a) The insured approached the insurer in writing for an extension before the three year period had elapsed.
(b) The disability was not yet determined due to the insured's unstable medical condition, or is still subject to medical examinations.
The insurer must also agree to an extension of an additional one year if the insured applied for an additional extension in writing within the second year of the extended period, provided that the insured's disability rate was not yet established. This period can be extended for an additional one year, if necessary.
The new guidelines also oblige insurers to disclose to the insured in the wording of the policy and in the annual reports that the inception date from which the limitation period starts to run is the date of the accident/illness, and that in the above described situations, the insurer has the duty to extend the limitation period.
Several days after publication of the guidelines, the Commissioner published a clarification according to which insurers which will not comply with the discovery orders mentioned above may lead the Commissioner to view the insured as if he requested to extend the limitation period based on the above guidelines, regardless whether such request was sent to the insurer or not.
Guidelines for Drafting an Insurance Programme (all Insurance Branches)
As an insurance programme is drafted by the insurer in order to serve as a contract between the insurer and the potential insureds, and as the insured is unable to alter the conditions, the insurer must draft the programme in a clear and simple manner. Hereunder are specific guidelines issued by the Commissioner for drafting an insurance programme:
(a) The coverage should give added value to the insured, thus answering a real need of the insured. The programme must take into account the length of the insurance period and the risks to which the insured is exposed.
(b) The programme should not grant the insurer an unfair advantage, such as negating the insured's right to appeal the insurer's decision, or include unreasonable exclusions or imposing on the insured an unreasonable duty or burden.
(c) The wording of the policy should be clear, without repeating the same issues. The name of the programme should indicate the main cover granted.
(d) The appendix to the guidelines includes a long list of conditions which are proper or improper to include in an insurance programme. Among the improper conditions one can find an arbitration clause, special interest clause, exclusion of "extreme sports" clause - without specific definitions as to what the term includes, full discretion granted to the liability insurer in handling the defence on behalf of the insured, etc.
The guidelines will not apply to policies which were issued to the insureds prior to the inception of the guidelines.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.