Mental health and insurance

Is the insurance industry missing the mark when it comes to mental health risks?
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01.Longstanding issue


The story

CHOICE investigates the longstanding issue of potentially discriminatory behaviour by the insurance industry towards consumers who have experienced some form of mental illness, from depression and anxiety to everyday work stress. If you've received counselling or medication, you may be unknowingly placed into a high-risk category for certain insurance products. We take a look at: 

  • The fight by mental health advocates for fairer assessment
  • The consumer vs industry perspective 
  • The legality of insurance discrimination 
  • Steps the industry has taken to address the issue 
  • Key cover denial stats from beyondblue and the Mental Health Council of Australia 
  • Which travel insurers cover mental health claims 
  • How to shop for insurance if you've sought help for a mental health issue 


Insurance companies don’t seem to know how to deal with the complexities of mental health, so they tend to assign a high level of risk to people with mental illness without taking individual circumstances into account. For the one in two Australians who will face a mental health issue at some point in their lives, the indiscriminate approach can mean the denial of cover, higher premiums or rejected claims, even if the illness has passed or is under control. 

This longstanding problem has been well documented, most notably in a large-scale project by the Mental Health Council of Australia (MHCA) and beyondblue. Their 2011 report found many people who have experienced mental illness have a hard time qualifying for cover and lodging successful claims, particularly when it comes to income protection and life insurance. The research also revealed that customer service reps can handle the matter insensitively during the application process, asking questions such as “are you currently suicidal or do you have plans to commit suicide within the next 12 months? 

About 60% of the 424 survey respondents had faced denial of cover, exclusion of mental illness claims or higher premiums. The insurance industry as a whole relies on “broad and often stigmatised assumptions” about mental illness, the report concluded.

Recognition that the insurance industry should take a more nuanced approach to assessing mental illness risks dates back to at least 1993, when the Australian Human Rights Commission undertook the first National Inquiry into the Human Rights of People Living with Mental Illness. The resulting Burdekin report found that the insurance industry “remains unjustifiably cautious – to the point of discrimination – in its assessments of risk in this area”, despite improvements in mental health treatments. The MHCA and beyondblue have lobbied for change for more than a decade without getting much traction. “Since beyondblue started talks with the insurance industry in 2002 no significant progress has been made,” CEO Kate Carnell told CHOICE.



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