Unfair and discriminatory treatment by insurance companies has been under the spotlight at the Banking Royal Commission, with insurance company TAL being grilled in relation to their treatment of a client who made a claim for income protection while being treated for cancer.
PIAC’s client, referred to in the Commission as ‘the second insured,’ obtained income protection insurance from TAL in 2013. Over three and a half years prior she had seen a psychologist a number of times following the breakdown of a relationship. During the application process she was asked if she had ever received advice or treatment for a mental health condition and answered truthfully that she had not. The insured was later diagnosed with cancer and made a claim on the policy, which TAL initially paid. However, after TAL obtained a copy of her medical records and discovered her appointments with the psychologist it cancelled her policy, claiming she had failed to disclose a mental health condition, and repeatedly threatened to recover the benefits it had already paid her.
TAL never told our client that it was investigating her and never gave her an opportunity to explain. Our client found out about the investigation during the same phone call in which TAL informed her of its decision to cancel the policy and that she owed it money. It subsequently refused to change its decision after receiving confirmation from the psychologist that she had never diagnosed our client with a mental health condition.
TAL’s conduct was even more concerning because it was clear from TAL’s own recordings that our client had been completely honest during the application process, making full and frank disclosures on a range of issues, and because there was no connection whatsoever between our client’s mental health history and diagnosis with cancer.
TAL’s decision left our client emotionally and financially vulnerable and fearful of legal action by TAL to recover the benefits she had been paid during an extremely difficult period of her life while she was fighting cancer.
For over four years, PIAC has assisted consumers to challenge unfair decisions by insurers through the Mental Health and Insurance Project and works with beyondblue and Mental Health Australia to drive systemic change.
‘TAL’s evidence before the Commission shows that for many years TAL has had a practice of looking for reasons to cancel policies and refuse to pay claims and of imputing mental health conditions that do not exist. Our work has shown that TAL’s treatment of our client is not isolated in the insurance industry,’ said PIAC Principal Solicitor Laura Lombardo.
‘Consumers have been automatically refused cover, had their claims declined or faced unreasonably broad mental health exclusions and additional premiums as a result of a current or previous mental health condition. This has included short historical episodes of anxiety or depression, or as a result of proactively managing issues like work-related stress and family issues by speaking with their GP or a psychologist.’
‘The law requires insurers to base decisions on robust evidence and contemporary understandings of mental illness. But insurers continue to make decisions on the basis of out-dated generalisations of mental health conditions and unfair assessments of individual circumstances.
‘PIAC’s work with beyondblue and Mental Health Australia has included pushing for change from the insurance industry itself. But progress has been too slow and self-regulated codes of practice have failed to protect consumers, or compel insurers to comply with anti-discrimination laws,’ added Laura Lombardo.
*Not her real name.
Read PIAC’s submission to the Royal Commission here.
Media contact: PIAC Media and Communications Manager, Gemma Pearce – 0478 739 280