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Report calls out ‘mental health discrimination’ by life industry – Life Insurance – Insurance News

A report from the Public Interest Advocacy Centre (PIAC) released today says the life insurance industry continues to engage in discriminatory practices against people living with mental health conditions or who have suffered symptoms in the past.

PIAC urged the Australian Securities and Investments Commission (ASIC) to investigate – as recommended by the Productivity Commission – life insurance industry practices relating to the provision of services to those with mental health conditions.

It says the investigation should consider discrimination in relation to mental health in the underwriting of insurance policies and adopt a model for investigation similar to that used by the Victorian Equal Opportunity and Human Rights Commission (VEOHRC) in its investigation into travel insurance.

VEOHRC investigated the practices of some “party” travel insurers for compliance with their legal obligations under the Equal Opportunity Act 2010 (Vic) during the period from July 1 2017 to April 19 2018. The party insurers represented 70% of the travel market at that time.

By the time VEOHRC had finalised its report, all party insurers had removed, or taken immediate steps to remove, blanket mental health exclusions from their travel insurance policies.

“This report outlines the progress that has been made in the areas of travel insurance and life insurance, as well as the remaining challenges, to provide an up-to-date overview of issues of mental health discrimination in insurance and options for reform,” PIAC said.

PIAC says the challenges include the continued likelihood of being denied cover or offered cover subject to broad exclusions for mental health, the difficulties encountered when people try to question or challenge those decisions, as well as the absence of clear evidence to support insurer practices of discrimination.

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Urging ASIC to investigate life insurers is one of 11 recommendations made by PIAC in the report. A few of the recommendations extend to general insurance as well.

The report calls for the removal of restrictive total and permanent disability definitions in policies and changes to the Life Insurance Code of Practice to include a commitment not to design and sell products with blanket mental health exclusions.

PIAC also wants transparency regarding actuarial and statistical data used by insurers. It says insurers should be required by their respective codes of practice to provide, directly to an applicant or insured on request, the actuarial and statistical data and relevant factors relied on to make a decision to decline cover or offer cover on non-standard terms on the basis of disability.

Another recommendation says the General Insurance Code of Practice and the Life Insurance Code of Practice should include a commitment by insurers to regularly review the data they rely on to make decisions to discriminate on the basis of mental health and continually seek better data to enable differentiated underwriting of particular mental health conditions.

PIAC is proposing as well for an improvement to the dispute resolution processes. It says the Australian Financial Complaints Authority should request ASIC approve a change to its Rules to enable AFCA to consider complaints regarding unlawful discrimination in relation to applications for insurance.

The Financial Services Council says it has looked at the PIAC report’s recommendations and supports most of the proposals made.

“Those we support will be included in the Life Insurance Code of Practice 2.0,” Policy Director Life Insurance Nick Kirwan told

“However, we believe codes should not be about re-stating the law, but instead cover those areas where industry goes beyond the law. Indeed, ASIC’s regulatory guide says that codes should do more than merely restate the law.”

Click here for the report.

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