Pattern of mental health discrimination in insurance industry

24th Feb 2022

A 10-year study of the insurance industry’s treatment of people has found systemic mental health discrimination that requires high-level investigation.

The Public Interest Advocacy Centre (PIAC) has compiled a report on mental health discrimination in the insurance sector. It found that people with a history of mental health issues are often being denied insurance, or offered cover that is subject to broad, unreasonable exclusions. The October 2021 report, Mental Health Discrimination in Insurance, discloses that mental health discrimination by insurers extends to people who have seen a counsellor because of anxiety or depression, but have not received a diagnosis of a mental health condition.

Common practice for insurers to avoid payouts to people with mental health disorders

At Stacks Law Firm, we frequently encounter discrimination by insurers against people with mental health conditions. We see insurance companies repeatedly creating obstacles to avoid paying out policies such as income protection insurance and total and permanent disability insurance. This is particularly the case where the claimant has experienced mental health problems.

Insurance companies finding ways around discrimination laws

The laws aimed at protecting people from mental health discrimination are contained in s4 and s24 of the Disability Discrimination Act 1992 (Cth), as well as s4 and s49M of the Anti-Discrimination Act 1977 (NSW). However, insurers continue to battle claimants by disputing evidence and by ignoring the contemporary understanding of what constitutes mental health.

Almost one in two Australian adults has had a mental disorder

The Bureau of Statistics says almost half of all Australian adults have experienced mental illness, and one in five has experienced mental illness in any given year.[i]

This is a conservative figure, as people are often reluctant to report or seek treatment for mental health problems.

The pandemic lockdowns have led to even further impacts on mental health and wellbeing.

Many denied insurance coverage and payouts due to history of mental illness

The PIAC report cites a case of a woman who had a panic attack while overseas and was hospitalised for 4 days. She was diagnosed with bipolar disorder. The insurer refused to pay her claim, as it had a blanket mental health exclusion in her travel insurance. It also implied that the disorder was a pre-existing illness, as she had experienced post-natal depression 16 years earlier.

In another case, a woman who was diagnosed with bipolar disorder 10 years earlier was denied insurance coverage. None of the three insurers she approached sought further information or offered alternatives.

In Australian Securities and Investments Commission v TAL Life Limited (No 2) [2021] FCA 193, the Australian Securities and Investments Commission brought a case against an insurer after it voided a policy for a woman with cervical cancer because she had not told them she had visited a psychologist 3 years earlier.

PIAC asks ASIC to investigate

PIAC worked with respected mental health organisations Beyond Blue, Mental Health Australia and SANE Australia to produce the report. It consolidates concerns raised by the Productivity Commission, Financial Services Royal Commission, Victorian Equal Opportunity and Human Rights Commission.

PIAC has called on ASIC to investigate how life insurers treat people with past or current mental health conditions.

Ongoing ramifications

Changes need to be made by insurers to ensure people with past or present mental health conditions do not face discrimination.

If this discrimination continues, it will discourage people from seeking essential treatment for common conditions like anxiety and depression.

Many people will fear that if they are diagnosed with a mental illness, this will lock them out of insurance support.

This is an edited version of an article first published by Stacks Law Firm.

The ALA thanks Nick Burton for this contribution.

Nick Burton has wanted to be a lawyer since he was 9 years old and conducted his first investigation to discover the true identity of Santa Claus – unearthing evidence of a present receipt, taking witness statements from his brother, and then confronting his parents about their fraudulent behaviour and felonious impersonation of Santa. While his investigation ruined Christmas that year, it awakened a passion for justice and sealed his future career. He is now a lawyer in the Hornsby office of Stacks Law Firm – working primarily in the family law team.


The views and opinions expressed in this article are the author's and do not necessarily represent the views and opinions of the Australian Lawyers Alliance (ALA)



[i] Public Interest Advocacy Centre, Mental Health Discrimination in Insurance (October 2021) <https://piac.asn.au/wp-content/uploads/2021/11/21.11.04-PIAC-Report_Mental-Health-Discrimination-Insurance.pdf>


Tags: NSW Mental health Nick Burton