Discovery marketing material ‘misleads’ by inviting multiple claims for each new dread disease

Discovery Life marketing material stating that policyholders could expect multiple claims to be paid out, regardless of whether the dread diseases are related to the first claim, is misleading, the Advertising Regulatory Board (ARB) has found.

Last month, the ARB instructed Discovery to withdraw an advert offering maternity benefits on gap cover, saying it was misleading because it did not spell out the waiting period.

Read: Discovery gap cover advert ‘should have made the waiting period explicit’

The crux of the latest complaint did not involve wording in paid-for advertising but appeared in Discovery’s marketing material.

In his complaint to the ARB, Ross Lazarus, a Discovery Life policyholder, said he was diagnosed with Parkinson’s disease in 2020, which was upgraded to a “Disability A” illness in 2022. He received payment for his severe illness, as well as his Overhead Expenses Benefit (OEB). OEB is paid to cover business-related expenses in the event of a diagnosis.

Lazarus asked Discovery whether a possible future diagnosis of dementia would also be covered by Discovery’s severe illness and OEB benefit. He was advised that Discovery would not pay another severe illness benefit if he developed dementia later in life, because this was related to his current diagnosis of Parkinson’s disease.

He submitted that his Discovery case manager told him, “You will only be able to claim under OEB for a new and unrelated condition to your Parkinson’s which would render you unable to fulfil your business obligations.”

Lazarus said this advice contradicted the claim that policyholders can submit multiple claims for dread disease diagnoses regardless of their relation to any prior claim.

Limitations are in the product guide

Discovery said its severe illness benefit does allow policyholders to claim for “multiple related non-progressive and unrelated claims, regardless of whether the subsequent claim is for a higher, lower, or the same severity as the previous claim”.

It said disclaimers were published on its website and advertising. Additional disclaimers would be added to remind people to speak to a financial adviser, and that product rules, and terms and conditions apply.

It said all policyholders receive a Discovery Life Plan Guide, which explains the more intricate aspects of their policy. In this instance, the guide states, inter alia, the following:

“The payment of the subsequent claim is dependent on whether the claim is progressive, related, or unrelated:

• A progressive claim refers to conditions where a worsening of symptoms or stages of the disease can be expected, for example the progression of cancer, connective tissue disease, or respiratory disease. For the severe illness benefit, a relapse of a previous cancer will be assessed as a progressive illness. See Appendix 1 for more information on how subsequent cancer claims will be paid.
• A related claim is a claim where there is a link to a previous claim, for example, complications or consequences of a disease or injury previously claimed for. This would be where the later claim would not have arisen if it was not for the initial condition or illness. It also includes side effects or complications of treatment of the previously claimed for condition. Progressive claims are not included in this definition.
• An unrelated claim is a claim which is not related or due to the original claim.”

‘Claim more than once’

The Directorate said the claim to which Lazarus objected appears, inter alia, on https://www.discovery.co.za/life-insurance/severe-illness-cover. This page briefly explains the purpose and nature of the severe illness benefit.

Lower down the page, a section titled “Reasons to consider Discovery’s severe illness benefit” lists six reasons, of which one is the claim at issue, “Claim more than once”. This is contextualised with the statement, “Our severe illness benefit includes the most extensive multiple claims facility in the market – allowing you to claim multiple times regardless of whether the dread diseases are related to the first claim or not.”

The Directorate accepted Discovery’s submission that Lazarus has received his full two years’ worth of OEB and was not entitled to any additional payments against this benefit. Its ruling assumed the OBE was not relevant to the dispute.

Contradiction in Discovery’s claim

Discovery outlined how its severe illness benefit differentiates between “related claims” (for instance, when heart surgery must occur following an earlier heart defect), “unrelated claims” (for instance, when one suffers a stroke that is not related to an earlier tumour found elsewhere), and “progressive claims” (for instance, when cancer progresses following earlier diagnosis or treatment).

It added there are certain conditions under which related and unrelated claims would be accepted (generally based on the severity of the condition that resulted in the current claim relative to the severity of prior claims).

In certain instances, and depending on the type of insurance cover selected, one might be denied a claim if the applicable severity level of the subsequent claim is lower than the highest severity level in the set of related claims that have been paid out previously. This information is set out in the “Discovery Essential, Classic and Purple Life Plan Guide”, which is received after a customer commits to a purchase.

Discovery said Lazarus’s condition falls under its nervous system benefit, which is part of its severe illness benefit. Claims under this benefit are primarily assessed in terms of their impact on one’s daily activities (known as Activities of Daily Living). To qualify for claims in terms of this component, the impairment or impact of one’s medical condition must be permanent. Once compensation for this impairment has been paid, the beneficiary cannot be compensated again.

Lazarus’s initial diagnosis met the criteria for permanent impact on his daily activities. He has been compensated accordingly. This is why a future diagnosis of dementia would not entitle him to receive another payment.

The Directorate said these submissions seem to suggest the following:

• Lazarus’s initial diagnosis was neurological in nature and qualified for a severe illness benefit because its impact on his Activities of Daily Living was severe and permanent, thus triggering compensation in terms of the policy.
• The hypothetical new diagnosis is also neurological in nature and would also constitute a diagnosis that has a severe and permanent impact on the policyholder’s Activities of Daily Living.
• However, because compensation has already been paid for the permanent and severe impact of the original diagnosis (a neurological condition), a subsequent payment for the hypothetical neurological condition is not possible, because the policyholder was already compensated for this severe and permanent impact.

The Directorate said this appears to contradict the claim that policyholders are permitted to “claim multiple times regardless of whether the dread diseases are related to the first claim or not”. Clearly, there are conditions under which multiple claims (whether related or unrelated) would not be permitted.

Invitation to claim for each new dread disease

The Directorate accepted that rules and limitations apply to products of this nature. No reasonable person would expect Discovery to pay compensation for any and every claim it receives.

“However, to promise customers the ability to claim ‘multiple’ times ‘regardless’ of whether the new claim is related in any way to a previous claim contradicts any notion of this particular type of limitation. It effectively invites customers to claim each time they receive a new dread disease diagnosis under the assumption that this new diagnosis will result in another form of compensation, even if the new diagnosis is related,” the Directorate said.

But this appears not to be the case, based on Discovery’s submissions, as well as the information in its Essential, Classic and Purple Life Plan Guide.

Discovery submitted that nearly R300 million was paid in 2022 for related, unrelated, and progressive claims under its severe illness benefits, which demonstrates that its invitation to “Claim more than once … regardless of whether the dread diseases are related to the first claim or not” is not misleading.

The Directorate accepted that many claims have been paid.

However, the submissions received from Discovery appear to suggest there are circumstances in which a policyholder would not be able to claim for a new dread disease diagnosis. Although such limitations are likely reasonable, they do not correlate with an invitation to “Claim more than once … regardless of whether the dread diseases are related to the first claim or not”.

Violation of the code

The Directorate found that the advert in its current format, and more specifically, the invitation to “Claim more than once … regardless of whether the dread diseases are related to the first claim or not” appear to convey a misleading impression in a manner that contravenes clause 4.2.1 of Section II of the Code of Advertising Practice Code.

Clause 4.2.1 states: “Advertisements should not contain any statement or visual presentation which, directly or by implication, omission, ambiguity, inaccuracy, exaggerated claim, or otherwise, is likely to mislead the consumer.”

The Directorate requested Discovery to remove or amend its claim and advised members of the ARB not to accept advertising from Discovery that includes the claim.

Discovery will ‘clarify the wording’

Discovery said it has noted the ARB’s ruling will clarify the wording of its severe illness benefit on our website, “while maintaining the essence of the ‘claim more than once’ wording”.

Discovery said its benefit guides contain clearly defined objective medical criteria, as well as graphical illustrations of the treatment of multiple unrelated, progressive, and non-progressive related claims.

“We have endeavoured to make this point clear and will continue to strive to communicate with the utmost clarity for our clients.”