Feery, Gabrielle; Johnstone, Amy --- "Alternative fax: Should doctors still fax patient results?" [2018] PrecedentAULA 74; (2018) 149 Precedent 42

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MENTAL ILLNESS AND INSURANCE – SYSTEMIC DISCRIMINATION THAT NEEDS TO CHANGE

By Dr Louis Schetzer

When Jake experienced a personal family tragedy at the age of 35 he entered a downward emotional spiral. He was diagnosed with post-traumatic stress disorder (PTSD) and had to take time off work. He thought that an overseas holiday would be a great way to relax. However, when he tried to obtain travel insurance and disclosed his PTSD diagnosis, the insurance company declined his application, compounding his anxiety.

One in five Australians is affected by mental illness in any 12-month period and

45 per cent of Australians will experience a mental illness at some time in their lives.^[1] Like Jake, many people who live with mental illness find it substantially more difficult than others to access many forms of insurance, including life insurance, income insurance and travel insurance. Their experiences suggest that there are systemic problems and discriminatory practices in the way insurers design, price and offer policies and assess claims for people with past or current mental health conditions. These discriminatory practices include determining terms during underwriting and the writing of policies to include blanket exclusion clauses.

INCIDENCE OF DISCRIMINATION BY INSURERS ON THE BASIS OF MENTAL ILLNESS

Under the Disability Discrimination Act 1992 (Cth) (DD Act) insurers are allowed to discriminate where the discrimination is based on actuarial or statistical data on which it is reasonable for the insurer to rely.^[2] In 2006, a Memorandum of Understanding (MoU) was entered into between stakeholders from the mental health sector and insurance sector. This MoU helped to develop the detailed guide Mental Illness and Life Insurance — What you need to know.^[3]

Despite these efforts, a 2011 report from Mental Health Council of Australia (MHCA) and Beyondblue demonstrates that many individuals who have suffered mental illness continue to experience discrimination from the insurance industry.^[4] Significantly:

• 45 per cent of respondents said that their applications for income protection insurance were declined due to mental illness;

• 67 per cent said it was difficult to obtain life and income protection insurance; and

• 50 per cent had insurance cover but paid more for their premiums or their policies excluded mental illness/health claims.^[5]

More recently, in June this year the insurance comparison site Mozo.com.au found that more than half of Australian travel insurers do not cover people with mental health conditions. Mozo analysed the product disclosure statements of 47 insurers, and also conducted a ‘mystery shop’ – contacting insurers to see what information their customer service representatives could provide – to find out how insurers treated mental illnesses.

It found that some of the major insurance companies that won’t cover mental health issues include AAMI, American Express, GIO, nib and Suncorp.

Mozo also found that of the 23 insurers that would consider covering mental health issues, there was a wide range of definitions and classifications. Among these insurers, mental health conditions included anything from stress and anxiety to suicidal ideation and schizophrenia. For 48 per cent of the insurance companies that would cover mental health conditions, symptoms of mental health issues were considered to be signs of a pre-existing condition.^[6]

WHAT ARE THE DISCRIMINATORY PRACTICES OF INSURERS?

Three recurring instances within the insurance process when individuals with mental illness are being assessed indicate systemic and discriminatory practices. They occur when:

1. an applicant discloses their mental health condition during the application process and the insurer refuses to make an insurance offer;

2. an applicant discloses their mental health condition during the application process and the insurer offers limited protection — specifically excluding claims arising from any mental health condition (not just the diagnosed condition); and

3. the insurer discovers that the applicant has failed to disclose a mental health condition and cancels the policy (even when the non-disclosure is minor and insurers could vary the terms of the existing policy).^[7]

These practices are powerfully illustrated in the following case studies drawn from the report Mental Health and Insurance released by Public Interest Advocacy Centre (PIAC) in April 2018.

Case study 1

AB was diagnosed with bipolar disorder ten years prior. Her condition was well managed with medication. She was never hospitalised and had never taken time off work because of her condition. She applied for increased income protection and total permanent disability (TPD) insurance through her superannuation provider. The application was denied. AB then applied for a stand-alone income protection policy with a different insurer and the application was again declined. She then applied to increase her death and TPD insurance through another superannuation policy and again the application was declined. None of the three insurers sought or obtained further information from AB before declining her application. None of the insurers considered the option of providing cover on non-standard terms taking into account AB’s pre-existing bipolar disorder.

Case study 2

FG experienced depression, anxiety and an eating disorder in her teenage years and experienced minor symptoms of anxiety around the time of her wedding (which was three years prior to her application for insurance). She was prescribed medication to assist her to sleep around this time.

When FG was in her mid-twenties, she applied for life and TPD insurance through her superannuation provider. The application was denied on the basis of her mental health history.

FG’s legal representative (PIAC) assisted her in her request to the insurer to conduct a review of its decision to decline her application. The insurer then offered FG a life insurance policy with no exclusions and a TPD insurance policy with the following mental health exclusion:

No total and permanent disability benefit shall be payable for any mental or nervous disease or disorder including but not limited to, anxiety, depression, stress, chronic fatigue syndrome, post-traumatic stress disorder, exhaustion or fibromyalgia, physical complications of psychiatric disorders, drug, alcohol or substance abuse, cognitive impairment, behavioural disorders or complications thereof.

The insurer did not provide any actuarial or statistical data to show that FG’s previous conditions would result in her being more likely to develop the extensive number of conditions listed in the proposed exclusion, or all other mental health conditions in the future.

PIAC assisted FG in protracted negotiations in relation to the scope of the proposed mental health exclusion in her TPD policy. The insurer eventually agreed to narrow the exclusion to apply to any claims directly arising from or directly related to any depressive disorder, anxiety disorder or eating disorder.

Despite the provision in the DD Act that allows insurers to discriminate where the discrimination is based on actuarial or statistical data on which it is reasonable for the insurer to rely, there is no positive obligation for insurers to provide copies of the actuarial and statistical data upon which they have relied when making decisions on insurance applications and claims. It may be that such information can be compelled from an insurer through discovery in a legal action but it is not reasonable to expect a disabled consumer to have to take on the stress, inconvenience, cost and risk associated with such an action simply in order to understand the basis for an insurer’s underwriting decision.

In Ingram v QBE Insurance (Australia) Ltd^[8] the insurer did not produce evidence to prove that its acts of discrimination were based on actuarial or statistical data within the statutory exceptions or that It would have suffered unjustifiable hardship if it had not included the mental illness exclusion in the policy issued. This case involved a woman who had developed severe depression after she purchased the policy, which prevented her from travelling and gave rise to her claim. She had no prior history of mental illness. The Victorian Civil and Administrative Tribunal decided that QBE could not rely on the statutory exceptions to excuse the discrimination, as QBE did not prove that the discrimination was based on reasonable actuarial or statistical data. No doubt the insurer would have produced such information had it existed. This case exemplifies the insurance industry’s misuse of blanket exclusion clauses without any proper documented basis.

The lack of disclosure of actuarial and statistical data is also illustrated in the following PIAC case study:

Case study 3

MK consulted a counsellor on an ad hoc basis for symptoms of anxiety. He was not provided with a diagnosis of any anxiety-related disorder, was not taking any medication and was not required to take any time off work due to his symptoms. MK applied for life and TPD insurance. The insurer offered life insurance with no exclusions and offered TPD insurance which excluded claims arising from:

Any disability that is a result of any mental disorder including, but not limited to, anxiety, depression, stress, fatigue, post-traumatic stress disorder, insomnia, exhaustion or fibromyalgia, physical complication of psychiatric disorders, drug or alcohol abuse, cognitive impairment, behavioural disorders or complications thereof.

MK requested the insurer change its decision to offer TPD insurance with this blanket mental health exclusion. The insurer declined this request.

MK’s legal representative wrote another letter to the insurer requesting that it change its decision on the basis that the insurer had failed to make inquiries into all relevant factors relating to the client’s application for insurance. If the insurer continued to insist on offering a TPD policy with a mental health exclusion, the lawyer requested that the insurer indicate in writing the actuarial or statistical data which it relied upon to apply the mental health exclusion clause to the TPD cover offered to MK, and all other relevant factors considered by the insurer in making the decision to apply the mental health exclusion clause to the TPD cover offered.

After reviewing MK’s medical records, the insurer reversed its decision and offered the

client a TPD policy without a mental health exclusion.

CHANGING THE PRACTICE OF THE INSURANCE INDUSTRY

Some of these issues were considered by the Parliamentary Joint Committee on Corporations and Financial Services in its inquiry into the life insurance industry conducted in 2017-18. In its report released in March 2018, the Joint Committee recommended various initiatives to improve the way that the life insurance industry typically deals with issues relating to mental health. Key recommendations include the establishment of a binding and enforceable code of practice in relation to mental health life insurance claims, and greater transparency when claims are rejected and when non-standard terms are proposed for a policy. Key stakeholders have been working with the life insurance industry to develop such a code of practice.

However, if a code of practice in relation to mental health life insurance claims is developed for the life insurance industry, it will not be of assistance in relation to other insurance products such as travel insurance or income protection insurance. Unless the code of conduct extends to other insurance products people like Jake – denied travel insurance on the basis of their history of mental illness – will continue to be disadvantaged.

In June the ALA joined with PIAC and Beyondblue to call on the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry to inquire into the practices of insurers in relation to people with past or current mental health conditions. The ALA considered that the Royal Commission offered an important opportunity to compel insurers to provide information regarding their internal practices and systems, and particularly what actuarial data is utilised in assessing risk and making decisions on insurance applications and claims.

In response, the September hearings of the Royal Commission focused on the insurance sector, with the opening statement by Counsel assisting, Rowena Orr QC, explicitly referring to the treatment of people with mental illness by life insurers, and how often these insurers refuse to provide cover for mental health conditions. The Commission heard evidence of how life insurance giant TAL hired a private investigator to follow, film and photograph a woman with a history of work-related anxiety and depression, in order to build a case to cancel her income protection insurance payments. The Commission heard evidence that TAL delayed the woman’s insurance claim at every step, and misrepresented medical and other records to allege she had an undisclosed, pre-existing mental illness – despite detailed medical evidence to the contrary.

TAL has admitted before the Commission that its blanket mental health exclusions on direct products fall below community standards. Likewise, QBE insurance acknowledged that being found in breach of anti-discrimination laws for selling a travel insurance product with a general mental health exclusion clause was an ‘issue’.

The Royal Commission has provided exposure to just a few of the examples of what appears to be extensive, systemic discrimination against people with lived experience of mental illness.

CONCLUSION

Given that approximately 45 per cent of the population report having experienced some sort of mental health condition,^[9] the incidence of mental illness will almost certainly touch all of our lives, whether personally or in relation to an immediate family member or close loved one. It should therefore be of major concern for all of us to have an insurance industry that appropriately responds to the needs of every person who experiences mental illness in their lives, without any form of discrimination or exclusion. The insurance sector serves an important role in providing financial security for many people in Australia. Those of us who experience mental illness should also be able to access that financial security without fear of discrimination or stigma.

The author wishes to acknowledge the work of his former employer, the Public Interest Advocacy Centre (and in particular, PIAC senior solicitors Michelle Cohen and Mary Flanagan) whose case work priority on the discriminatory practices of insurance companies in relation to people with mental illness has been significant in highlighting this important issue.

Dr Louis Schetzer is Policy and Advocacy Manager at the Australian Lawyers Alliance. PHONE [phone] EMAIL [e-mail].

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^[1] Australian Bureau of Statistics (ABS), National Survey of Mental Health and Wellbeing: Summary of results (2007) Australia, ABS cat. no. 4326.0, available at

<http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4326.0Main+Features12007?OpenDocument> .

^[2] Disability Discrimination Act 1992 (Cth), s46(1)(f).

^[3] Available online at <http://www.lifewise.org.au/downloads/file/aboutthelife wisecampaign/Mental_illness_and_life_insurance_a_brief_guide_FINAL2.pdf> .

^[4] Mental Health Council of Australia and Beyondblue, Mental health, discrimination & insurance: A survey of consumer experiences 2011 (2011).

^[5] Ibid.

^[6] R Clun, ‘An absolute minefield: Why Daryl couldn’t get travel insurance’, Sydney Morning Herald, 3 August 2018.

^[7] Public Interest Advocacy Centre, Mental illness and insurance (2015) <http://www.piac.asn.au/news/2015/06/mental-illness-and-insurance> .

^[8] Ingram v QBE Insurance (Australia) Ltd (Human Rights) [2015] VCAT 1936.

^[9] T Slade, A Johnston, M Teesson, H Whiteford, P Burgess, J Pirkis and S Saw, The Mental Health of Australians 2, Report on the 2007 National Survey of Mental Health and Wellbeing (2009) Canberra, Commonwealth Department of Health and Aged Care.