Ahead of the government’s economic reform roundtable, the Council of Australian Life Insurers (CALI) has joined calls for “urgent action” to address Australia’s growing mental health crisis.
“Life insurers play an essential role in strengthening Australia’s financial safety net, but by the time someone comes to us, they’ve often exhausted all supports available. They’re really unwell, and it is extremely hard to help them recover and get back to work,” CALI chief executive Christine Cupitt said.
“Even more concerning is the outlook for future generations. Two in five young Australians are affected by mental health challenges, and we’ve seen a 732 per cent increase in claim rates among people in their 30s permanently leaving the workforce due to mental ill-health.
“This should not be the story of young Australians experiencing mental ill-health.”
The life insurers joined a number of organisations, such as Mental Health Australia and the National Mental Health Commission, in signing an open letter to Treasurer Jim Chalmers.
The group highlighted the economic impact of mental ill-health, with the yearly cost on the economy estimated in the range of $220 billion.
The national coalition has put forward three calls to action, which CALI said it “strongly supports”:
- Co-ordinate a whole-of-government response to the mental health crisis, including developing national mental health targets and driving government action and accountability across departments.
- Guarantee Australians equitable access to timely treatment and support, no matter where they live, by better funding quality community-based services and allowing both the public and private systems to help people sooner.
- Invest in education, training and boosts to the mental health workforce to ensure Australia has an adequate supply of mental health professionals to meet the care needs of the Australian people.
“Addressing the mental health crisis could be the single biggest productivity reform Australia can make this decade,” Cupitt said.
“The Treasurer and participants in the economic reform roundtable can’t ignore the impact mental ill-health is having on our nation’s productivity. With more people taking time off and leaving work altogether, the toll of this mental health crisis is undeniable.
“We need the government to lead a collective effort, one backed by industry, clinicians and the community, to strengthen the safety net and support Australians when they need it most.”
Last month, the industry body said Australia is “reaching a tipping point” with mental ill-health insurance claims.
Alongside insurers paying out more than $2.2 billion in retail mental health claims in 2024 – almost double the amount paid just five years ago – the latest CALI and KPMG Cause of Claims Results report found mental ill health is also driving one in five income protection claims, with payouts totalling $887 million last year alone.
“The entire safety net, not just life insurance, is under pressure,” Cupitt said at the time.
“Every year we see a growing number of people, particularly younger Australians, leaving the workforce for good due to mental health conditions.”
“732 per cent increase in claim rates among people in their 30s permanently leaving the workforce due to mental ill-health”.
Or perhaps it’s just a 732% increase in TPD claims citing mental health as the cause, due to the ease of making such claims without objectively verifiable evidence, and walking away with a big cash handout funded by insurers jacking up the premiums of other policyholders to unsustainable levels.
Insurer timidity and mismanagement has created the mental health claims crisis, which has morphed into an existential crisis for TPD and IP products. Insurers should be getting their own house in order, rather than telling the government what to do.
And let’s not forget those lovely litigious lawyer folk advertising everywhere in the TPD space scaring the heebie jeebies out of the insurers.
Do you really think that a young person entering the job market dreams of being depressed and two years later claim Total Permanent Disability? And do you think that growing pattern is only linked to young people trying to abuse a loophole in the system? The reflection needs to be broader than just a KPI on an industry that is interpreted as malfunctioning (life insurance). The rise of claims is more a symptom of a society not going well rather than the lack of performance of a business being the cause, this is not a numbers game, please broaden your horizons and look around you!! The risk for all of us is actually exactly to reduce the problem to a productivity number that needs to be improved. Inviting you to read the book and 30 years study “the anxious generation” by Jonathan Haidt. Both medical and education sectors are overwhelmed today by an unforeseen phenomenon: an epidemic rise of anxiety amongst younger and younger kids. I am involved in both sectors and see it regularly now. This is a society phenomenon, not an industry one.