Shikdar v Hannover: life insurance – duty of disclosure


On 9 June 2009, Mr. Shikdar applied by telephone for a policy of life insurance with Hannover Life Re of Australasia Ltd (“Hannover”).  Hannover asked Mr. Shikdar whether he had a heart condition.  Mr. Shikdar referred to his coronary artery and said that he had cholesterol.

On 31 January 2011, Mr. Shikdar suffered a fatal cardiac arrest.  The administrator of the estate of Mr. Shikdar made an insurance claim for the death benefit of $525,000.00.

In the course of investigating the claim, the insurer discovered that in 2005, Mr. Shikdar had a heart attack and underwent heart surgery, and that in 2009, Mr. Shikdar had tests for his heart condition.  The insurer declined the claim on the basis that Mr. Shikdar breached his duty of disclosure in relation to his heart condition.  If Mr. Shikdar had disclosed his heart condition, the insurer would not have offered insurance.

The estate brought proceedings against the insurer. The insurer instructed William Roberts Lawyers.


The Court held that the insurer was entitled to avoid the insurance contract pursuant to section 29 of the Insurance Contracts Act 1984 (Cth) (the “Act”).

The Court held that the insurer asked clear questions about any heart condition, repeated the question four times and sought clarification of the responses provided.  In stark contrast to this, the Court found that Mr. Shikdar’s answers constituted evasion, misdirection and a false statement as well as a lack of disclosure.

The Court found that Mr. Shikdar made a misrepresentation about his heart condition to the insurer, and failed to comply with his duty of disclosure.  The Court held that Mr. Shikdar did so fraudulently, as he made the statements and omissions recklessly without caring whether they were true or false in circumstances where he held no honest belief in the truth of the representation that he made.

The Court held that Mr. Shikdar knew, and any reasonable person could be expected to have known, that the statements regarding a heart condition would have been relevant to the decision of the insurer whether to accept the risk. Accordingly, the exception under section 26 of the Act did not apply.

During the telephone call, the insurer informed Mr. Shikdar of the duty of disclosure orally.  Five days later, Hannover posted a product disclosure statement including information on the duty of disclosure to Mr. Shikdar.  The Court recognised that insurers routinely take applications over the telephone.  The Court confirmed that during these calls, it is not reasonably practicable for insurers to give information about the duty of disclosure in writing.  Insurers must give the information orally during the call and also give the information in writing within 14 days pursuant to section 69 of the Act.  The Court held that the insurer complied with these requirements in this case.

Practical implications for insurers

This judgment highlights the importance insureds complying with their dutyof disclosure and insurers having objectively verifiable processes and procedures that comply with the Act when offering insurance.

William Roberts Lawyers recommends the following practical steps:

  • discuss with staff how to recognise evasive or ambiguous answers;
  • encourage staff to take the time to ask follow-up questions to clarify the answers.  In this claim for $525,000, the follow-up questions took only 55 seconds.  That’s $10,000 per second; and
  • ensure that audio recordings of telephone calls are clear and stored in an efficient way that enables retrieval when needed.

The insurer in Shikdar and Hannover was represented by William Roberts Lawyers.

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