Life insurers urged to take a fairer approach to mental health

PIAC has called for an investigation into systemic discrimination by life insurers against people with past or current mental health conditions, in a submission to the Productivity Commission’s draft report on mental health.

In particular, PIAC has called for an end to the widespread practice by life insurers of applying broad mental health exclusions to income protection and other life insurance policies when a person discloses a history of a mental health related condition.

‘We support the Commission’s calls for greater scrutiny of the life insurance industry, but any investigation must focus specifically on life insurance and the use of broad mental health exclusions when policies are offered,’ said Senior Solicitor, Ellen Tilbury.

The Commission’s draft report estimates that mental ill-health and suicide are costing Australia up to $180 billion per year and treatment and services are not meeting community expectations. It identifies insurance as an important mechanism for people to financially protect themselves, but notes the significant problems arising from stigma and poor understanding of mental illness within the insurance sector.

PIAC has been working with beyondblue and Mental Health Australia for several years on behalf of the many consumers affected by unfair insurance policies and practices in relation to mental health.

The most significant issue PIAC has seen for those with a mental health condition accessing insurance is the use of outdated and discriminatory blanket mental health exclusions in travel insurance, and extremely broad mental health exclusions in life insurance.

The travel insurance industry has recently improved its practices following a Victorian court decision and investigation by the Victorian Equal Opportunity and Human Rights Commission, with many insurers removing these blanket exclusions from policies, but unfortunately change in life insurance has not followed.

‘Discrimination against people with past or current mental health conditions by life insurers remains widespread, particularly in relation to income protection and total and permanent disability products,’ said Ellen Tilbury.

‘Our case work shows life insurers routinely deny cover and apply broad mental health exclusions which are not supported by evidence and do not reflect the risk posed by the applicant to the insurer.’

‘So far, no government inquiry has conducted a thorough and comprehensive investigation into systemic discrimination in underwriting practices of life insurers in respect of mental health conditions.’

PIAC supports the other recommendations proposed by the Productivity Commission in relation to mental illness in the insurance sector and hopes these will lead to positive reform in the industry.

The Productivity Commission’s final report is due to be published in May 2020.

Read PIAC’s submission.

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