# Insurer Penalized for Bad Faith Conduct in Traveler's Medical Claim A traveler received $5000 compensation after an insurer prioritized cost-cutting over medical safety. - **Source:** [NZ Herald](https://www.nzherald.co.nz) - **Published:** 2026-11-12 - **Topic:** [Finance](https://brifing.si/c/finance) - **Original article:** - **On Brifing:** https://brifing.si/s/4fa17cec-b029-461d-a3db-15259b979ce4 ## Unauthorized Medical Advice While traveling in Bali, a New Zealand citizen fell seriously ill and required a medical escort to return home safely. Despite medical advice from two doctors and Air New Zealand, the insurer’s emergency representative insisted the traveler was fit to fly alone, directly contradicting professional clinical assessments provided to the patient. ## Pressure to Deceive The insurer suggested the traveler book flights with a different airline while intentionally withholding information about her medical condition. This directive aimed to bypass airline safety protocols, effectively pressuring the patient to compromise her health to reduce the insurer's potential costs. The traveler ultimately had to arrange her own medical support. ## Escalation During Transit Traveling with a friend who was a former paramedic, the patient suffered a medical emergency during the flight to Sydney. This necessitated an unplanned hospital admission upon arrival. The incident highlights the severe risks posed when insurance companies ignore professional medical requirements in favor of minimizing their own financial liability for claims. ## Partial Claim Rejection Upon returning to New Zealand, the insurer refused to cover the full costs of the business-class flights and the companion’s travel expenses. They only reimbursed an amount equivalent to the original economy seat, leaving the traveler to bear significant financial burdens caused by the insurer's initial refusal to provide necessary support. ## Ombudsman Investigation Findings The Insurance & Financial Services Ombudsman Scheme investigated the case and ruled in favor of the traveler. The findings concluded that the insurer acted in bad faith, failing to treat the claimant fairly. The ruling emphasized that the company’s conduct went beyond simple administrative error, representing a significant breach of professional standards. ## Legal Obligations Breached The investigation determined the insurer violated the Financial Markets Conduct Act 2013 and the Consumer Guarantees Act 1993. By failing to provide services with reasonable care and skill, the company neglected its fair conduct obligations. These laws exist to protect consumers from predatory practices during vulnerable medical situations while traveling abroad. ## Financial and Moral Redress As a result of the ruling, the insurer was ordered to cover all outstanding travel and medical costs incurred by the traveler. Additionally, the company must pay $5000 in compensation specifically for the inconvenience and distress caused by their handling of the claim, acknowledging the severe impact of their poor conduct. ## Broader Industry Implications This case serves as a warning regarding the ethical responsibilities of travel insurers when managing high-stakes medical claims. Ombudsman Karen Stevens highlighted that travelers require clear, practical support during emergencies. Prioritizing cost-reduction over patient safety is not only a breach of contract but a violation of fundamental consumer protection laws globally. ## Sources covering this story - https://www.nzherald.co.nz/business/seriously-ill-kiwi-traveller-awarded-5000-payout-after-insurer-found-to-have-acted-in-bad-faith/XLUHLCZ2BVAMLAE6XWNLRTQTEM/ — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._