Australian Lawyers Alliance (ALA) spokesman Josh Mennen said in a statement that the treatment of those with mental health ailments by the insurance industry is an “important issue” that the commission needs to consider.
“We believe there are systematic problems in the way people with mental health conditions are treated by the insurance industry,” he said.
“The insurance industry needs to be asked to explain its practices and have these decisions externally reviewed by the royal commission.”
Mr Mennen said some insurance clients have had their policies cancelled after disclosing mental health conditions to their insurers, even in cases where it was a “minor or one-off incident”.
“We have also seen examples of clients who have not disclosed a mental health issue and have had their policies cancelled, even when their condition is minor and could just have resulted in a small variation to the policy,” Mr Mennen said.
“With almost half of all Australians likely to experience a mental health issue at some stage in their life, such discriminatory practices will impact many people.”
The ALA said the insurance industry needs to become more transparent in the way it handles these issues, and that the royal commission presents an opportunity for the treatment of mental health conditions by insurance firms to be properly examined.
The big problem with this whole “insurers should to make it easier to get a mental health payout” philosophy is the question of who actually pays for it? Lobby groups and the media love to perpetuate the myth that insurance claims can be easily funded from the overflowing profits of greedy insurance companies. But in reality the majority of insurance claims need to be funded by other policy holders who don’t claim. The more mental health claims the insurers allow, the more they need to increase the premiums of people who don’t claim. This is why we have seen massive increases in income protection premiums over recent years, and more people dropping out of IP cover.
If mental health really is a major societal problem that needs to be funded, then it should be funded by the taxation system. Placing the financial burden on insurance companies effectively means that ballooning mental health issues are being funded by a small and shrinking subset of individuals who have chosen to get income protection insurance. It is not sustainable.
There are issues with the way insurers assess mental health – especially with respect to councilng sessions leading to mental health exclusions. But should this be a major focus of the royal commission? I don’t think so and the industry is already conducing reviews to improve in this area. Lawyers would just be bitchy about it because mental illness is rife in the industry. Better that the commission focus on the known evils – banks treatment of business and commercial finance, poor lending practices for ill equipt borrowers, collusion of rate setting, and the property sectors attempts to flog property as a financial product without any of the requirements to provide advice.
I understand the Australian Society of Funeral Directors is contemplating a similar recommendation to prevent insurance companies from discriminating against dead people.This flagrant abuse of human rights by denying people life insurance post-mortem has to cease – just because this practice has been going on for centuries doesn’t make it right. And just because you’re dead doesn’t mean to say your a bad risk or should have your basic human rights taken away from you. Come on life insurers – have a heart. And while you’re at it, anyone who has displayed mental or emotional disorders should be automatically covered also – it’s not as if claims in this space have cost the overall pool of lives covered much money. Rather than waste funds with trifling practices like underwriting, risk assessment, or disabled lives analysis, you’d be better off allocating funds to the legal profession to dream up stuff and nonsense like this.
you said it better than I ever could!
Understand underwriting needs to be conducted into mental health history and most often exclusions need to be applied however, my experience shows the insurers are just too harsh. I recently asked an underwriter about a few scenarios and was surprised with the response. Scenario one – a husband has a wife that is showing signs of depression and anxiety goes to a psychologist for ideas on how to help her will himself receive a mental health exclusion. Scenario two – a business owner sees a performance coach who is a registered psychologist to ramp up his business would likely receive a mental health exclusion. Then there’s the people that have seen a psychologist once 5 years ago due to being stressed about a breakup, marriage breakup etc, with no medication, recurring symptoms or time off work will receive a mental health exclusion.
This is simply too harsh in my opinion.
Spoke to an insurance BDM today that said they have reviewed their policy on mental health. A person that visits a psychologist once due to basic stress with no mental health diagnosis beyond that and no medication will most likely not be excluded anymore. A breath of fresh air.
I must admit – It’s quite alright for insurers to discriminate against and cancel the policies of clients when boring old, non-trendy medical histories like joint injuries, cancer and cardio vascular disease are not disclosed – but mental health? I mean, it’s not like mental health conditions are really real anyway so why should insurers be cancelling cover for these people? It’s totally systemic – I bet insurers all get together and say ‘yeah people with mental health are all hipsters and millennial’s and we should just not given them cover’. If nearly half of all Australians are going to have mental health problems, why on earth would insurers want to be discriminating against all that potential claims data?