Life insurance industry under review for mental health claims

by NZ Adviser24 Feb 2017
An Australian Senate hearing into how mental illness is handled by the life insurance industry has revealed that a “wealth of data” from the medical community is being ignored.

The Senate Joint Committee on Corporations and Financial Services received more than 60 submissions regarding its inquiry into the life insurance industry itself. Also included were submissions from health providers, legal services and private citizens.

The Huffington Post reported that representatives from Beyondblue and the Royal Australian and New Zealand College of Psychiatrists (RANZCP) told the hearing that people with mental health conditions reported they had been mistreated in trying to obtain, and make claims on, their insurance.

Dr Stephen Carbone from Beyondblue said the organisation received "hundreds" of claims of discrimination over unfair insurers, and claimed up to half of people with mental health conditions suffered difficulty in obtaining insurance because of their condition. 

"Much more needs to be done to improve transparency of decisions about refusing insurance for people in this context," the RANZCP said at Wednesday's hearing.

Carbone claimed that declaring a history of attending therapy or counselling, or taking anti-depressants, was a "red flag" when trying to obtain insurance.

"Your risk rating goes through the roof, you're deemed as high risk and ineligible, or extra premiums, or excluded from being compensible for that condition should it recur," Carbone told the hearing.

Beyondblue called for the inquiry to remove ‘blanket exclusions’ – clauses which treat all mental health conditions as if they are the same. The organisation cited post-natal depression as just one example that often gets bundled into a “homogenous and high risk” group.

RANZCP also cited a 2011 report by Beyondblue which had the following key findings:
  • 35% of the 424 respondents strongly agreed it was difficult for them to obtain any type of insurance as they had experienced mental illness.
  • 67% agreed it was difficult to obtain life and income protection insurance.
  • 45% said their application for income protection insurance was declined due to mental illness.
  • 50% got insurance cover but either paid more or faced exclusions for mental illness claims.
The Senate inquiry continues.
 

COMMENTS

  • by Fali Mistry Insurance Adviser NZ 24/02/2017 2:58:18 p.m.

    Hi
    Mental health illness and back pain condition are very chronic in nature and clients with this condition don't rehabilitate soon and become termite to insurer I am broker in NZ and have many chronic claimants who goes around world and do every normal things but their GP writes they are depressed so insurer have no option but to pay There is lot of misuse by Consumers around this benefit
    Hence I feel insurers are very fair in Redflagging such prospects

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