Travel insurer acted in bad faith over medical repatriation, ombudsman finds

A New Zealand travel insurer has been found to have acted in bad faith after advising a seriously ill policyholder to fly home from Bali without disclosing her medical condition to the airline.

The Insurance & Financial Services Ombudsman (IFSO) Scheme upheld the woman’s complaint, finding that the insurer’s handling of her medical repatriation claim breached its fair conduct obligations and put her health at risk.

The woman had become too unwell to return to New Zealand as planned. Two doctors advised that she needed a companion to travel, while Air New Zealand’s medical team determined that she required a nurse or doctor to accompany her.

However, the insurer’s emergency assistance representative maintained that she was fit to fly alone and that it would not cover medical escort costs.

When Air New Zealand refused to carry her without an escort, the insurer suggested she use another airline without informing it of her medical condition.

The insurer offered to cover a business-class seat but declined to pay for a companion.

The woman subsequently arranged for a friend, a former paramedic, to travel to Bali and accompany her home. During the return journey, she suffered a medical emergency and was admitted to hospital in Sydney, forcing both travellers to book additional flights to New Zealand.

The insurer later partially rejected her claim, refusing to reimburse the full cost of the business-class tickets, her companion’s travel expenses, and the replacement flights from Sydney.

Ombudsman finds insurer breached fair conduct obligations

Following an investigation, the IFSO Scheme found that medical evidence supported the woman’s need for a companion and that business-class travel was reasonable given her original booking and medical circumstances.

The scheme found that the insurer’s conduct went beyond unfair treatment and amounted to bad faith.

It also identified a material breach of the insurer’s fair conduct obligations under New Zealand's Financial Markets Conduct Act 2013, alongside a failure to provide services with reasonable care and skill under the Consumer Guarantees Act 1993.

The insurer was required to reimburse the outstanding business-class and companion travel costs, including replacement flights from Sydney to Christchurch, and pay NZ$5,000 in compensation for the inconvenience caused.

Further reading: The importance of selecting the appropriate level of medical escort care and the implications for patient safety during repatriation.