Mental health and insurance

Related Project: Discrimination

August 11, 2016

Photo: shutterstock

Nearly half of the Australian population will experience a mental illness in their life.

Despite the prevalence of mental health conditions, discrimination against people with mental illness remains widespread. This is particularly so in the area of insurance.

In the experience of PIAC’s clients, some insurers offer cover that is more expensive, or deny insurance altogether, on the basis of a persons’ mental health despite there being no diagnosis of a mental illness.

For example, a person may be denied insurance cover for all forms of mental illness in the future, just because they have seen a work counsellor for a short period, but have no other history of mental illness. 

For clients who have been diagnosed with a mental illness, they may find themselves subject to a blanket refusal of insurance (such as travel insurance), rather than being able to take up a policy that covers risks that are not related to their mental illness. In PIAC’s experience, some insurers appear to be overestimating the risks involved in insuring people who can demonstrate a high level of functioning despite their mental illness.

Such practices may be unlawful under state and federal anti-discrimination law and PIAC has worked with numerous clients in this situation. We are also working with beyondblue, Mental Health Australia and Victoria Legal Aid to seek systemic change.

We believe insurers should make a genuine assessment of the risks posed by all applicants for insurance. Insurers should offer insurance that reflects the real risk posed by the application for insurance and not on generalised or outdated understandings of mental health conditions.

PIAC, beyondblue and Mental Health Australia have called on insurers to improve their policies and practices in relation to mental health. We have also called on governments to make changes to the law to ensure people with a mental health history are treated fairly.

We are calling on the government to ensure that:

  • there is stronger protection for consumers
  • the data and information insurers rely on when excluding or rejecting claims based on a mental illness is made available to consumers
  • detailed reasons for any denial of cover are provided
  • insurers must report annually on how often and on what basis they discriminate because of a mental illness
  • insurers comply with updated Insurance Industry Anti-Discrimination Guidelines, which could be developed by the Australian Human Rights Commission
  • the ‘other relevant factors’ insurers can consider in declining insurance are specified.