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Case Study: Can insurers seek a refund from you, or offset future payments?


Written by:
Melissa O'Neill
National Practice Leader | Superannuation & Disability Claims, Special Counsel

Susan Buswell v TAL Life Limited [2018] NSWSC 1507

Here at Shine, we help many people to make a claim for compensation after they have been injured at work as a result of their employers’ negligence. These workers compensation claims generally focus on the loss of earnings the person has suffered as a result of their injury.

Many people will also have income protection insurance though their superannuation or personal life insurance policy, and are able make a claim to access these benefits. This helps to secure their income, at least until the workers compensation claim is finalised and they have some certainty back in their lives.

There can be a catch though – in a lot of cases the income protection insurers want to seek a refund of the benefits they paid, out of the workers compensation claim settlement amount. That is because, on face value, the person has received their loss of income twice – once though the income protection claim and once though the workers compensation process.

The general legal principle is that this type of “double dipping” is not allowed.

Often the income protection insurer will attempt to seek either a refund for income protection payments already made to their client, or to offset future income protection benefits their client is due to receive, if the client has received a lump sum payment as a result of a compensation claim settlement or judgement.

TAL is one of Australia’s largest life insurers and has regularly attempted to engage in this practice. One claimant disagreed with TAL’s approach and took them to Court:

The situation

Susan Buswell (the plaintiff in this case) was medically discharged from the Police Force in 2014 and began accessing her income protection benefits through TAL. Because her illness was work related, Susan also made a workers compensation claim, and this settled with her receiving a lump sum payment.

TAL wanted a repayment of the benefits it had paid to her, because it claimed her lump sum compensation contained an allowance for her loss of past wages. They argued that she was not entitled to “double dip”, that is, be compensated twice for the same loss.

Susan argued that the settlement sum for her injury was not to cover her past loss of income, but rather an amount for the loss of capacity to earn an income in the future.

The outcome

Because of the specific wording of the offsetting clause in the TAL policy, the Court found that an allowance for a “loss of earning capacity” was characterised as a loss that was capital in nature, rather than income that was lost.

The Court therefore determined that TAL was not entitled to any repayment of the benefits it had already paid to Susan, nor was it entitled to offset them into the future from her lump sum compensation claim.

So what does this mean for you?

The outcome of Susan Buswell v TAL Life Limited [2018] NSWSC 1507 is a win for workers who have been injured at work (as a result of their employer’s negligence) and are seeking to make a claim to access their insurance benefits as well as make a workers compensation claim.

Based on the outcome, there are a few things that can be taken away from this case:

  • Depending on the wording of your policy, an insurer may not be able to:

    • seek a refund from you for past benefits paid to you, if you have also received a compensation settlement; or
    • offset your future entitlements to income protection benefits through any compensation settlement amount.
  • Prior to settlement in a personal injuries claim, it is crucial for your income protection policies to be reviewed to determine whether the settlement monies will be considered a ‘benefit offset’. In the absence of the word ‘common law’ or ‘any time of compensation’ in the policy definition, this case is likely to apply.

How can Shine help you?

Shine Lawyers are Superannuation and Income Protection Insurance experts who can help you access your full benefits and entitlements through your superannuation, life insurance or other insurance policies. Our dedicated team will be with you through each step of the claims process, providing clear and tailored advice for your situation. We offer our services on a No Win No Fee basis, so book an obligation-free discussion with our team today so that we can help you get back on your feet as soon as possible.

Written by Melissa O'Neill. Last modified: May 20, 2020.

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