Assessing claims for Total and Permanent Disablement (TPD) benefits at the correct point in time is critical to the claims assessment process. However, identifying the date of assessment has not been without some dispute.

Typically, TPD definitions require an insured person to cease work “through” injury or sickness, that they remain absent from work for a designated period (often referred to as the Waiting Period or Qualifying Period) and that it be determined by the insurer that the insured person will never return to work within their education, training or experience.

In the 2006 Federal Court decision of Auspine Staff Superannuation Pty Ltd v Henderson [2006] FCA 1281 Jessup J held that the relevant date for assessment was when the insurer made its decision. His Honour appears to have taken this view on the basis that assessing the claim at the date of the decision allowed the insurer to consider the facts (particularly in relation to the insured’s employment prospects) at that point in time. His Honour stated:

“The definition is concerned with a present unlikelihood of something occurring in the future. That is to say, the insurer must consider whether is it presently unlikely that the person concerned will ever again be able to work of the kind described. It follows that, when it considers whether to make a determination, the insurer must look at all the facts as they present themselves at that time… For the insurer not to take this approach, but to have looked only at facts and circumstances as they existed some time previously, would not be in accordance with the definition of TPD in the policy

(emphasis added)

The date of assessing whether the insured person is capable of returning to work within their education, training or experience was subsequently considered in Erzurumlu v Kellogg Superannuation Pty Ltd [2013] NSWSC 1115[1] and Halloran v Harwood Nominees Pty Ltd [2007] NSWSC 913[2]. In both cases, the court adopted end of the Waiting Period/Qualifying Period as the date of assessment.

In Shuetrim v FSS Trustee Corporation [2015] NSWSC 464 His Honour Stevenson J stated:

“During submissions, my attention was directed to a number of TPD cases where the question of the relevant time for assessment was considered.

Differing views have been expressed in those cases as to the relevant date. Very often, those views have been informed by provisions in the relevant trust deed or governing regulation which cast light on the question…”

Stevenson J stated that the consideration of the correct date of assessment “must turn on the proper construction of the insurance policies themselves, and in particular of the TPD definitions in the polices.”

The relevant policy contained a six-month waiting period. There was a dispute at trial as to whether the correct date of assessment was at the end of the waiting period, or the date when the insurer made its decision in relation to the claim. His Honour Stevenson J held (following Erzurumlu and Halloran) that the correct date of assessment was at the end of the six-month waiting period and preferred this view on the basis:

“Otherwise, it would be open to an insured person to seek to satisfy the insurer, at any time after having been absent from work for six months, and perhaps many years later, that he or she was relevantly incapacitated by reason of the injury or illness that led to his or her absence from work.” [3]

Shuetrim (as well as being useful in clarifying a number of other common issues that arise in these matters) appears to have clarified the uncertainty surrounding the correct date of assessment. Moving forward, insurers should have some comfort that the assessment of TPD should be made at the end of the Qualifying Period/Waiting Period and not as at the date of their decision.