Canada Life Limited · DRN-6175452

The complaint Mrs B complains that Canada Life Limited has turned down an incapacity claim she made on a group income protection insurance policy. What happened The background to this complaint is well-known to both parties. So I’ve simply set out a summary of what I think are the main events. Mrs B is insured under her employer’s group income protection insurance policy which provides cover if she’s incapacitated from work due to illness or injury. The policy deferred period is 13 weeks. In August 2024, Mrs B was signed off from work after suffering from low mood, anxiety and panic attacks. So she made a claim on the policy. Canada Life requested medical evidence so it could assess Mrs B’s claim. This included evidence from occupational health (OH), a psychologist, a psychiatrist, a call with one of its nurses and a review by its medical officer (MO). The MO considered that Mrs B was suffering from burn out syndrome, which they said wasn’t a medical or psychiatric condition which was covered by the contract. So Canada Life concluded that Mrs B wasn’t suffering from an incapacity in line with the policy terms. And it turned down her claim. Mrs B returned to work on a phased basis in March 2025. As she was unhappy with Canada Life’s claim decision, she asked us to look into her complaint. Our investigator didn’t think Canada Life had treated Mrs B fairly. In brief, he was persuaded by the medical opinions of the psychologist and psychiatrist which both stated that Mrs B was suffering from a diagnosed mental health condition. And he felt the evidence indicated that Mrs B met the policy definition of incapacity. So he recommended that Canada Life should accept and pay Mrs B’s claim, together with interest, until the point she returned to full-time work. He also felt Canada Life had caused unreasonable delays in the assessment of the claim, so he recommended it pay Mrs B £500 compensation. Canada Life disagreed. In summary, it said that Mrs B’s symptoms were a situational response to her unique workplace and that her symptoms were consistent with work-related stresses, rather than a recognised medical or psychiatric illness. It also stated that the duration of Mrs B’s phased return to full-time work was outside of what it would have considered to be a reasonable timeframe. The complaint was passed to me to decide. I asked our investigator to let both parties know that if I were to uphold the complaint, I’d likely tell Canada Life to accept and settle Mrs B’s claim from the date the deferred period ended, in line with the remaining terms and conditions, and subject to periodic review during the relevant period, together with interest and £500 compensation.

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Mrs B provided further evidence and information which showed why she believed she should be paid benefit for the duration of her phased return to full time hours. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Having done so, I don’t think Canada Life has treated Mrs B fairly and I’ll explain why. The relevant regulator’s rules say that insurers must handle claims promptly and fairly. And that they mustn’t turn down claims unreasonably. I’ve taken those rules into account, amongst other relevant considerations, such as regulatory principles, the policy terms and the available medical evidence, to decide whether I think Canada Life handled Mrs B’s claim fairly. I’ve first considered the terms and conditions of the policy, as these form the basis of Mrs B’s employer’s contract with Canada Life. Mrs B made an incapacity claim on the policy, given she wasn’t fit for work. So I think it was reasonable and appropriate for Canada Life to consider whether Mrs B’s claim met the policy definition of incapacity. I’ve turned then to look at the relevant definition of ‘incapacity’. This says: ‘We will treat a member as suffering incapacity if, throughout the deferred period and beyond, the member’s illness or injury prevents them from, and makes them incapable of, performing the material and substantial duties of their normal occupation.’ Material and substantial duties are defined as: ‘the duties that a member is normally required to do to perform their normal occupation and which cannot reasonably be omitted or modified by you or the member. The duties refer to the tasks the member is required to perform, and whether those tasks could be carried out for you or any other employer.’ This means that in order for Canada Life to pay incapacity benefit, it must be satisfied that a member is suffering from an illness or injury which prevents them from carrying out the material and substantial duties of their own occupation for the full 13-week deferred period and beyond. It’s a general principle of insurance that it’s for a policyholder to show they have a valid claim on their policy. This means it was Mrs B’s responsibility to provide Canada Life with enough evidence to demonstrate that her illness had led to her being unable to carry out the duties of her own occupation for the full 13-week deferred period and afterwards. Canada Life assessed the evidence Mrs B provided in support of her claim, including with clinical staff. While it sympathised with Mrs B’s position, it concluded that she wasn’t suffering from a mental illness which prevented her from carrying out her role. Instead, it felt that Mrs B was suffering from a stress reaction to her workplace which didn’t amount to a defined medical problem. So I’ve next looked at the available medical evidence to assess whether I think this was a fair conclusion for Canada Life to reach. I’ve first considered Mrs B’s GP records. In August 2024, the GP noted that Mrs B was suffering from anxiety, low mood and panic attacks due to stress. The GP noted that Mrs B’s anxiety was linked to her work. Mrs B was signed-off work and in September 2024, a new fit note was issued stating that Mrs B wasn’t fit for work due to ‘anxiety state.’ In October 2024, Mrs B was signed off again with anxiety, low mood and panic attacks due to stress.

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Mrs B was assessed by OH, initially in October 2024. The OH physician noted Mrs B’s work- related issues and concluded that Mrs B wasn’t fit to work, stating: ‘ln my professional opinion, (Mrs B) is suffering with an acute stress reaction, causing emotional lability, intensive low mood episodes and intense anxiety.’ In December 2024, Mrs B was assessed by the OH again. They suggested that Mrs B should seek the opinion of a psychiatrist (in addition to the psychologist Mrs B was seeing). The OH physician concluded: ‘At the current time, (Mrs B) is not fit for work. l would encourage a further four to six weeks off work.’ And in mid-February 2025, OH said: ‘l do feel (Mrs B) is ready to start a gradual phased return to work, starting with three half days per week for the next four to six weeks, starting (in) March.’ They recommended that Mrs B should undergo a stress risk assessment with her employer. Mrs B’s consultant psychologist provided a letter in support of Mrs B’s claim, dated December 2024. They said: ‘Mrs B is suffering with depression, anxiety and work related stress. On balance of probabilities, Mrs B’s psychological symptoms are related to her work stress as I believe there are no other contributing factors… Mrs B is working very hard in therapy and engage well, however her symptoms continue to persist at a moderate to severe level. At present I do not believe that Mrs B is fit to return back to work and on balance of probabilities she is unlikely to be fit to return back to work for a further 2 months.’ In February 2025, Mrs B was reviewed by a consultant psychiatrist. They identified ongoing physical and emotional issues going back many years, which had affected Mrs B’s mental health. And they concluded Mrs B was suffering with ‘Mixed Anxiety and Depressive Disorder (preceded by an Adjustment disorder, with predominant disturbances of emotions’. They said: ‘In summary, her previous features of anxiety symptoms - excessive worrying, fears, and somatic symptoms like shaking, sweating etc; alongside her depressive features of low mood, fatigue, loss of interest in activities as well as poor sleep pattern and loss of appetite, are severe enough to warrant a psychiatric diagnosis…the work situation last year was stressful enough to grind down the remaining emotional battery leading to a significant impaired emotional wellbeing ad [sic] general functioning.’ Mrs B underwent a call with Canada Life’s nurse in late February 2025. The nurse found: ‘Workplace issues did precede (Mrs B’s) absence from work and these remain unresolved. However, following improvements in her mood since January 2025, (Mrs B) is planning to return to work (in) March 2025 and a phased plan has been provided by OH. The workplace issues are employer specific so (Mrs B) did mention that if things do not work out then she may consider looking for an alternative role.’ Canada Life’s MO, a consultant physician and rheumatologist, also reviewed the available medical evidence. They concluded that Mrs B’s personal history and symptoms were: ‘the features that are found in the so-called ‘Burn Out Syndrome’, where an individual, especially with a pre-existing vulnerable personality, is subjected to stresses at work which are unresolved, that leads on to a syndrome which is characterised by the features that have now taken her off work… If Mrs B had worked for another Employer where these factors had not emerged, then there would have been no loss of work…She has been fit for full-time

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work all along, were it not for these employment issues. It is a matter of the perceived employment factors emanating from her Employer’s handling, that have resulted in her work absence – and not a physical or a mental illness.’ I’ve thought very carefully about all of the evidence that’s been provided. It’s important I make it clear that I’m not a medical expert and it isn’t my role to interpret evidence to reach a clinical judgment or substitute expert opinion with my own. Instead, I must weigh up the medical evidence provided to decide whether I think Canada Life treated Mrs B fairly. On the one hand, the evidence broadly points to the initial cause of Mrs B’s symptoms being workplace issues. I accept that these were likely specific to Mrs B’s employer. I’ve also carefully considered the MO’s (as a consultant physician) clinical opinion and the opinion of Canada Life’s nurse. It’s clear that the MO did not consider Mrs B was suffering from a diagnosed medical or psychiatric condition. On the other hand, both Mrs B’s treating consultant psychologist and consultant psychiatrist concluded that Mrs B did have a psychiatric condition – mixed anxiety and depressive disorder. While their evidence supports that workplace issues contributed to Mrs B developing anxiety and depressive disorder, they provided an ultimate diagnosis of a psychiatric condition, rather than simply workplace stress. The psychiatrist also referred to the impact on Mrs B’s general functioning. I’m mindful that both the psychologist and the psychiatrist are experts in mental health conditions. The OH physician too, an expert in occupational medicine, stated that Mrs B was suffering from intense anxiety and that she was not fit for work. This is a finely balanced case. However, having weighed up all of the evidence, like the investigator, I am more persuaded by the medical evidence of Mrs B’s consultant psychologist and consultant psychiatrist. This means I think the evidence shows it’s more likely than not that Mrs B was prevented from carrying out the material and substantial duties of her own occupation due to a diagnosed psychiatric illness. And I’m also persuaded, on balance, that Mrs B has provided enough evidence to show she met the policy definition of incapacity throughout the deferred period and beyond. This means that I don’t think it was fair for Canada Life to turn down Mrs B’s claim. Instead, I find it should have accepted and paid Mrs B’s claim, in line with the policy terms. Nonetheless, this doesn’t mean I direct Canada Life to pay Mrs B’s full claim until the point she returned to work on a full-time basis. Mrs B returned to work on a phased basis in March 2025 and so proportionate benefit may be due under the terms of the contract. However, as Canada Life didn’t accept the claim, I don’t think it’s had a reasonable chance to assess the ongoing medical evidence from the time of Mrs B’s phased return to decide how long benefit should be paid. So I don’t think it would be reasonable or appropriate for me to make such an award. Instead, in my view, it would be fair and reasonable for Canada Life to pay the claim in line with its policy terms and subject to review during the life of the claim. If Mrs B is unhappy with any settlement she is paid, she may be able to make a new complaint about that issue alone. Additionally, there were clear delays in Canada Life’s progression of this claim. Mrs B submitted her claim in October 2024. But Canada Life didn’t make a claims decision until mid-March 2025. It has provided no evidence to show the reason for this delay or that it took steps to progress the claim, despite knowing about Mrs B’s symptoms and the situation she was in. So I’m not satisfied it’s shown it handled the claim promptly or fairly. Given Mrs B’s situation and vulnerability at the time, I think the delay in handling her claim is likely to have

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caused Mrs B additional, unnecessary distress and inconvenience. So, like the investigator, I find Canada Life must pay Mrs B £500 compensation to reflect the impact of its claim handling delays on her. Putting things right I direct Canada Life Limited to: • Accept and settle Mrs B’s incapacity claim from the date the deferred period ended, in line with the remaining terms and conditions, and subject to periodic review during the relevant period; • Add interest at a rate of 8% simple to each benefit payment from the date each benefit payment was due until the date of settlement*; and • Pay Mrs B £500 compensation+. It will be for Canada Life to assess the medical evidence to consider how long proportionate benefit was potentially due under the policy terms. *If Canada Life considers that it’s required by HM Revenue & Customs to deduct income tax from that interest, it should tell Mrs B how much it’s taken off. It should also give Mrs B a tax deduction certificate if she asks for one, so she can reclaim the tax from HM Revenue & Customs if appropriate +Canada Life must pay the compensation within 28 days of the date on which we tell it Mrs B accepts my final decision. If it pays later than this, it must also pay interest on the compensation from the deadline date for settlement to the date of payment at 8% a year. My final decision For the reasons I’ve given above, my final decision is that I uphold this complaint and direct Canada Life Limited to put things right as I’ve outlined above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs B to accept or reject my decision before 13 May 2026. Lisa Barham Ombudsman

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