National MP Llew O’Brien has been campaigning for more scrutiny of the insurers’ claims processes, particularly relating to mental health issues. Andrew Taylor
Renegade Nationals MP Llew O’Brien has been assured by Treasurer Scott Morrison that the government’s royal commission will examine mental health insurance claims despite the terms of reference not specifically mentioning it.
Mr O’Brien, who played a critical role in setting up the royal commission by throwing his weight behind the push for commission of inquiry into the financial services sector, said it would look at cases relating to “discriminatory practices involving insurance cover, including both denial of cover and denial of claims.”
A spokeswoman for Mr O’Brien told the AFR Weekend the member for Wide Bay, Queensland had “been assured by the Treasurer that mental health matters can be considered under the [royal commission’s] terms of reference.”
On Monday Mr O’Brien thrust the treatment of mental health by life insurers into the spotlight, saying he would cross the floor to provide the numbers needed for a private member’s bill for the commission of inquiry if its terms of reference were widened to include discrimination by insurance companies and other financial service providers.
The royal commission’s draft terms of reference issued by the federal government on Thursday said the former High Court Judge Kenneth Hayne-led inquiry would look at “any conduct, practices, behaviour or business activity by a financial services entity that falls below community standards and expectations.”
Mr O’Brien’s spokeswoman said its broadness would allow for cases where people whose claims or coverage were denied on the basis of mental health, to be considered.
“This is a comprehensive royal commission covering the whole industry, not just parts or sectors. It has the ability to force the disclosure of settlements that have been otherwise protected by confidentiality agreements, which is important so as to expose the nature and shortcomings of such settlements,” said Mr O’Brien.
“I am very concerned about cases where an isolated event, with a particular cause, may effectively be used by an insurer to sabotage that person’s ability to gain cover or make a future claim.”
Mr O’Brien said concerns about discrimination from insurers may cause people to not seek help for “fear of future reprisals,” and pointed to an example where a women may be denied income protection insurance because she temporarily suffered from post-natal depression.
“She may completely recover from that depression, but is then denied income protection insurance because there are an unreasonable number of exclusions, or, there is a blanket policy of refusing insurance to anyone who has experienced that particular condition,” he said.
“With over 45 per cent of Australians estimated to experience anxiety or depression, we can ill afford the impact of any form of discrimination, including insurance discrimination, that would prevent people from seeking treatment when they need it, in the same way they would seek medical assistance to manage any other kind of illness.”
Surging mental health claims have triggered sharp losses on disability income policies for some of the country’s largest insurers, raising concern from the Australian Prudential Regulation Authority.
Over the past four years, the life insurance industry has lost $1.5 billion on retail income protection policies and has been loss-making for 10 years. Globally, over 50 per cent of disability claims relate to mental health issues.
“The biggest issue I would have is whether the market will be able to sustain continued provision of these types of covers and my point is, if the claims rate continues at the current rate the prices will go up to levels where people cannot afford it and we won’t have cover,” he told the AFR Weekend.
This piece by Alice Uribe was first seen on ‘The Australian Financial Review’ 1 December 2017.