Mental health discrimination on the rise in insurance claims

A concerning trend for claims

In our work, we see this reflected in claims for superannuation insurance, where mental health claims have now become the single biggest type of claim – accounting for over 24% of all TPD claims.

But another trend is emerging - insurers are accepting fewer claims based on mental health conditions.

Our client Linda’s story serves as an example of the difficulties facing people trying to make claims, and the risk of discrimination at the policy level, and the claims process.

Linda's story

Our client Linda worked as an Early Childhood Educator. When her marriage ended leading to a divorce and custody battle, she sought support from her doctor for depression. This was noted in her clinical record and she was prescribed anti-depressants, a treatment that Linda chose not to continue. Eventually, she managed her way through that period of her life and was able to put it behind her.

Upgrading her insurance

Years later, Linda had progressed in her career and was making more money, and wanted to ensure that she had adequate insurance coverage to support her daughter if something happened to her.

She met with a Financial Adviser, who recommended that she take all her super from her industry fund and move it to a retail fund. Linda was concerned that this would mean she’d lose access to her automatic insurance cover for Death and Total and Permanent Disability Insurance (TPD). The adviser explained that she’ll have a new suite of cover under her new super fund, including Death, TPD and Income Protection Insurance.

When the adviser is making the application, he asks her if she has any mental health issues, to which she answers honestly that no, that she didn’t have any conditions.  

Linda's diagnosis and claim

Several years later, Linda was diagnosed with Multiple Sclerosis (MS),  unrelated to any other medical issues. Her symptoms include limb numbness and memory loss, and is unable to work. She makes a claim for TPD under her new policy, which authorises the insurer to go back through her medical history.

Denied claim

When the insurer then uncovers the episode of depression from several years ago, they decline the claim on the basis that they wouldn’t have underwritten the policy had the previous illness been disclosed – despite it having nothing to do with the MS in her claim.  

In this instance, we could advise Linda on a few legal angles:

• There was a potential claim against the adviser for negligence and not properly understanding her situation to recommend she switch from a product that would have covered her.
• We could make a claim against the insurer to challenge their ability to avoid the claim, and
• We could make a claim for unlawful discrimination, related to Linda’s previous mental health diagnosis.

Linda knew that it wasn’t fair so she came to us to seek advice and understand her legal options.

It’s important to know that even if you’ve had a claim declined, that doesn’t mean it’s the end of the road or that you can’t pursue other legal avenues.

We’re here to help

Our experienced superannuation insurance lawyers have worked on hundreds of cases and know the system inside and out. We can help you understand what legal options are available and provide expert advice and support to get the outcome you deserve.