Calls for investigation into life cover health discrimination

Worries about the way life insurance companies are applying blanket exclusions based on mental health issues, have led to calls for the Australian Securities and Investments Commission (ASIC) to investigate the practice.

A report from the Public Interest Advocacy Centre, titled Mental Health Discrimination in Insurance,found significant concerns with how life insurers treat people with past or current mental health conditions.

Public Interest Advocacy Centre senior solicitor Ellen Tilbury said the call for ASIC to investigate the sector was the key recommendation from the report, which was the culmination of 10 years of work.

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“Despite several major inquiries recommending reform, we continue to see people with a mental health history denied insurance or offered cover subject to broad, unreasonable exclusions, in the absence of clear evidence to support these practices,” Ms Tilbury said.

“This includes where a person has seen a counsellor once or twice, because they felt anxious or depressed following a relationship breakdown and have received no diagnosis of a mental health condition.”

The Public Interest Advocacy Centre has been working with mental health organisations Beyond Blue, Mental Health Australia and SANE Australia to tackle the systemic problems with the way insurers design, price and offer policies and assess claims to the detriment of people with past or current mental health conditions.

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The report also shares concerns that have been raised by the Productivity Commission and several major inquiries including the financial services royal commission and the Victorian Equal Opportunity and Human Rights Commission that have also examined these unfair and potentially unlawful practices.

In good news, the report found that there had been some improvements to the treatment of mental health in travel insurance in recent years, but there were persistent problems with life insurance products such as income protection insurance and total and permanent disability insurance.

Other recommendations in the report include measures to enhance industry accountability, including increased transparency in relation to the actuarial and statistical data relied upon by insurers to make their decisions, changes to the Life Insurance Code of Practice and improved dispute resolution processes.

The report recommends that the Life Insurance Code of Practice should include a commitment not to design and sell products that incorporate a blanket mental health exclusion in the general terms of the policy.

It also recommends that where a pre-existing condition is used by an insurer as the basis for denying a claim, a direct medical connection between the prognosis of a pre-existing diagnosed condition and the claim itself must be established.

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Ms Tilbury said that almost half of all Australians have experienced a mental health condition and that insurance was a vital service that many people relied upon to protect their financial security and ultimately their wellbeing.

“We don’t believe that change will occur unless underwriting practices relating to mental health come under the scrutiny of ASIC – the appropriately empowered regulator,” she said.

“If insurers don’t lift their game, there is a real chance people will be discouraged from seeking essential treatment for common conditions like anxiety and depression, for fear of being locked out of insurance.”

Have you ever had a life insurer refuse you cover based on mental health grounds? Do you feel there is need for a review of the blanket exclusions applied by the sector? Why not share your thoughts in the comments section below?

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Ben Hocking
Ben Hocking
Ben Hocking is a skilled writer and editor with interests and expertise in politics, government, Centrelink, finance, health, retirement income, superannuation, Wordle and sports.
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