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INSURERS’ UNDERWRITING OF PEOPLE WITH MENTAL HEALTH ISSUES

Mental Health, Discrimination and Insurance: A Survey of Consumer Experiences 2011 outlines the results of a survey which revealed great difficulties faced by Australians with history of mental health problems when seeking insurance products or trying to make claims against their existing policies. Mental health consumers reported that if they do not get an outright refusal of cover, which happens in many cases, then their policies are subjected to higher premiums and multiple exclusion clauses.

The survey has also demonstrated that insurance consumers are not aware of their rights and responsibilities regarding insurance applications, such as their right to appeal or a duty to disclose relevant information. Furthermore, questions asked by the call centre stuff of the insurance companies as to the applicants’ intended suicide attempts were seen as belittling and undignified.

STATISTICS OF MENTAL ILLNESSES IN AUSTRALIA

In 2007, 45% of Australians aged 16-85 years, (or 7.3 million people), had at some point in their lifetime experienced a mental disorder. The annual cost of mental illness in Australia has been estimated at $20 billion. One in five Australians will be affected by mental illness in any twelve-month period, and one in two will be affected in a lifetime. Given the above-mentioned statistics, it is alarming to many that Australians with a history of mental health issues are denied a fair and equitable access to insurance.

RECENT VICTIM OF INSURERS’ DISCRIMINATION

“WT” thinks of herself as one of the victims of insurance discrimination. She has lost her husband to suicide and to cope with her grief she sought counseling and took medication for a brief period. Not long after, she took a life insurance policy to make sure that if something happens to her, her children will be financially protected.

However, the insurance company told “WT” that she will not be covered against a broad range of mental health-related conditions, including anxiety and stress. “They just said that if I seek any form of assistance, whether it be counseling, psychological assistance, medication, anything that’s on my record for the next two years, then I won’t be covered for that,” “WT”said, ‘If I fall into a dark hole and I actually need help, you’re almost encouraging me to take the option that I wouldn’t want to take and put more risk to my kids’.

WHAT THE INSURERS SAY

According to one insurance broker “WC”, applicants who can demonstrate that their mental illness is under control have a better chance of avoiding a mental health exclusion or higher premiums. One of the most critical things the insurers may look at is whether the applicant has recently been on sick leave from work due to mental health reasons, and, if he or she has, the insurer is unlikely to provide a cover for this person. A cover might also be denied if an applicant is undergoing treatment and constantly changes medications, what is seen by the insurers as a sign of inability to control the illness.

IS THIS DISCRIMINATION LEGAL? 

Australian anti-discrimination law does not prevent insurance companies from denying a cover to people with disabilities, including ones with mental health issues, if this discrimination is based on statistical data that shows a special degree of risk for the insurers. They are also not prohibited from discriminating against people with mental health problems under the umbrella of ‘other relevant factors’, such as sound commercial judgment.

The MHCA and BeyondBlue argue that, even while being currently legal, the insurance industry may still be in breach anti-discrimination laws because its behaviour reflects a profound misunderstanding of mental illness.

IS THERE A WAY OUT?

One of the ways to improve insurance services for members with mental health issues is a special training for call centre stuff to advance their skills in dealing with callers in distress, including people in a suicidal state, asking whether their families would receive a payout. Moreover, there is an urgent need for a better organised claims data to develop a more detailed understanding of the rate, type and reporting of mental illness-related insurance claims.

That said, significant improvements need to be done in educating not only the insurance and financial sector workforce, but all Australians regarding the real-world experiences of mental health issues, to get rid of the stigma attached to mental health consumers, and to minimise the discrimination they experience as a result of profound misinformation and misconception.

Third party insurance such as CTP motor vehicle injury compensation has decreased significantly over the last 20 years, leaving it to first party insurance such as income protection or life / TPD cover.  Like the now better-understood flood insurance problem, executive review and statutory intervention may be the best solution so that reasonable insurance (cover and price) is broadly available in the marketplace.