Banking Royal Commission report signals to insurers: lift your game on mental health

Principal Solicitor, Michelle Cohen.

PIAC has welcomed the Banking Royal Commission’s final report as a step towards addressing the unfair treatment of people with mental health conditions or symptoms.

‘For years, PIAC has been working with beyondblue and Mental Health Australia on behalf of the many consumers affected by unfair insurance policies and practices in relation to mental health,’ said Senior Solicitor Michelle Cohen.

‘The Commission’s recommendations are a step towards establishing a fairer system by restoring a balance that has long favoured insurers over consumers.’

PIAC’s submission to the Commission, which includes case studies, is available here. 

One of the Commission’s recommendations is to amend section 29(3) of the Insurance Contracts Act so that an insurer can only cancel an insurance policy on the basis of non-disclosure or misrepresentation if it can show that it would not have entered into a contact on any terms.

This recommendation closes a loophole that insurers have relied on to cancel policies for innocent non-disclosure of a mental health history in circumstances where that history is entirely unrelated to the illness that is the subject of an insurance claim.

‘This will mean that insurers will be forced to vary policies, which is already currently an option available under the Insurance Contracts Act, instead of cancelling policies in circumstances that are deeply unfair,’ said Michelle Cohen.

Importantly, the Commission has also recommended enforceable codes of conduct.

‘It’s clear that self-regulation of the insurance industry hasn’t worked and we welcome this call for greater public accountability.

‘We are committed to working with the insurance industry towards a fairer system where decisions are based on facts and evidence rather than out-dated generalisations and unfair assessments of individual circumstances,’ said Michelle Cohen.

While the Commission has made a number of important recommendations that will ultimately benefit and protect consumers, there is still more work to be done to ensure that insurers do not discriminate against current and prospective policy holders on the basis of mental health.

‘We will continue to call for insurers to lift their game and make sure they are dealing with individual insurance policy applications and claims on the basis of robust, contemporary statistical and actuarial data.’

Media contact: PIAC Media and Communications Manager, Gemma Pearce – 0478 739 280

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