New Zealand travel insurers have been told to consider evidence properly when handling claims, after one operator was found to have risked a policyholder’s health to cut costs.

Industry ombudsman Karen Stevens delivered the warning after an insurer rejected a woman’s request for a medical escort home when she fell seriously ill in Bali.

The unnamed insurer was found to have acted in bad faith and breached its fair conduct obligations, and Ms Stevens says the advice it gave put the traveller at risk.

The woman – given the alias Cara – was told by two doctors that she needed a travel companion to fly.

Air New Zealand refused to take her home without a medical escort, but the insurer’s emergency service phone representative told Cara it would not pay the escort costs and she was fit to travel without one.

They suggested she book with another airline without telling it about her medical conditions, according to the NZ Insurance & Financial Services Ombudsman Scheme.

Cara asked a friend – a former paramedic – to travel to Bali and help her get home, and she booked them business class seats to Sydney.

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During the flight she had a medical emergency and was admitted to hospital on arrival. She had to rebook travel to New Zealand later.

Cara claimed for her additional travel, accommodation and medical costs, including her companion’s flights.

The insurer partially accepted the claim, but IFSO has ruled it must now pay $NZ5000 ($4064) for inconvenience, plus the companion’s fares and the cost of the flights from Sydney.

“We were seriously concerned that after Air New Zealand said Cara needed a medical escort, the insurer suggested she use another airline without telling it about her medical conditions. This directly risked Cara’s health in order to reduce costs,” Ms Stevens said. 

The case shows that whether or not an expense is reasonable depends on the circumstances, she notes.

Business class travel may sound unusual, but Cara originally booked a Skycouch that would allow her to lie down, and the insurer itself identified business class as a suitable alternative.

“How an insurer responds to a customer’s circumstances is also important, particularly when that customer is sick, vulnerable and overseas.

“Consumers should be able to expect their insurer to consider the information fairly, communicate clearly and provide reasonable assistance,” Ms Stevens said.