Some life insurers are inappropriately applying broad exclusions or denying life insurance altogether to consumers who disclose mental health conditions. This was one of the key findings of a report released on life insurers approach to mental health by the Life Insurance Compliance Committee.

Quotes from Financial Rights Legal Centre, Amy Knox, Assistant Director of Casework:

“This report has confirmed what we have suspected for a long time – that life insurers do little if anything with the information that applicants provide them and simply deny or exclude them.”

“We want consumers to feel they can be open and honest in applying for insurance, and to be offered products that are designed and distributed to meet their needs. The findings of this report demonstrate that life insurers are rarely if ever upholding their end of the bargain.”

“The report found that the information consumers disclose had “little to no influence on the final decision” which led to “even mild or well managed conditions” resulting in exclusions or denials. This is incredibly disappointing.

“Life insurers asking for intimate consumer health information is a privilege and we expect that they use that information to better design products and tailor products for consumers individual needs - and not reject or insert blanket exclusions.”

“Only two underwriting guidelines reviewed out of 48 showed the life insurer considered alternatives to exclusion and denial including applying a higher premium or imposing a limit or cap on cover. The report further found that in the rare circumstance they do consider alternatives the result is extremely limited with alternatives applied in a small number of very narrow circumstances.”

“This behaviour is not what life insurers have committed to under their code of practice and raises questions whether they are meeting the requirements of the Disability Discrimination Act 1992.”

“Regulators need to step in to examine what is going on here to ensure that life insurers are meeting the law, their commitments under the code of practice and community expectations.”

Contact

For further information contact Financial Rights [email protected] or 0457 024 683