9 Feb 2022A ten year study of the insurance industry’s treatment of people has found systemic mental health discrimination that requires high-level investigation.
The Public Interest Advocacy Centre (PIAC) has compiled a report on mental health discrimination in the insurance sector. It found people with a mental health history are often being denied insurance, or are offered cover that is subject to broad, unreasonable exclusions.
The report discloses that mental health discrimination by insurers extends to people who had seen a counsellor because of anxiety or depression, but had not received a diagnosis of a mental health condition. (See Mental Health Discrimination in Insurance, Public Interest Advocacy Centre, November 2021.)
Common practice for insurers to avoid payouts to people with mental health disorders
Here at Stacks Law Firm, we frequently encounter discrimination by insurers against people with mental health conditions.
We see insurance companies repeatedly creating obstacles to avoid paying out policies such as income protection insurance and total and permanent disability insurance.
This is particularly the case where the claimant has experienced mental health problems.
Insurance companies finding ways around mental health discrimination laws
There are laws aimed at protecting people from mental health discrimination.
These are contained in section 4 and section 24 of the Disability Discrimination Act 1992, as well as section 4 and section 49M of the NSW Anti-Discrimination Act 1977.
However, insurers continue to battle claimants by disputing evidence and by ignoring the contemporary understanding of what constitutes mental health.
Almost one in two adult Australians has had a mental disorder
The Bureau of Statistics says almost half of all adult Australians have experienced mental illness, and one in five have experienced mental illness in any given year.
This is a conservative figure, as people are often reluctant to report or seek treatment for mental health problems.
The pandemic lockdowns have led to even further impacts on mental health and wellbeing.
Many denied insurance coverage and payouts due to history of mental illness
The PIAC report cites a case of a woman who had a panic attack while overseas and was hospitalised for four days. She was diagnosed with bipolar disorder.
The insurer refused to pay her claim, as it had a blanket mental health exclusion in her travel insurance. It also implied it was a pre-existing illness, as she had had post-natal depression 16 years earlier.
In another case, a woman who was diagnosed with bipolar ten years earlier was denied insurance coverage. None of the three insurers she approached sought further information or offered alternatives.
In 2020, the Australian Securities and Investments Commission brought a case against an insurer after it voided a policy for a woman with cervical cancer, because she had not told them she had visited a psychologist three years earlier. (See Australian Securities and Investments Commission v TAL Life Limited (No 2) [2021] FCA 193.)
PIAC asks ASIC to investigate mental health discrimination in insurance industry
PIAC worked with respected mental health organisations Beyond Blue, Mental Health Australia and SANE Australia to produce the report.
It consolidates concerns raised by the Productivity Commission, Financial Services Royal Commission, Victorian Equal Opportunity and Human Rights Commission.
PIAC has called on ASIC to investigate how life insurers treat people with past or current mental health conditions.
Ongoing ramifications if insurance industry continues mental health discrimination
Changes need to be made by insurers to ensure people with past or present mental health conditions do not face discrimination.
If this discrimination continues, it will discourage people from seeking essential treatment for common conditions like anxiety and depression.
Many people will fear that if they are diagnosed with a mental illness, this will lock them out of insurance support.
