How To Appeal a Decision on Life Insurance

An important issue facing the community and people living with a mental health problem is their ability to receive appropriate insurance coverage, including income protection insurance and life insurance.

However, if you are refused a life insurance product due to mental illness, there are a number of avenues to pursue in seeking a review of this decision.

STEP ONE - APPEAL

As the first step, we suggest you write to the Chief Underwriter of the company concerned.  Set out you complaint in full and ask the Chief Underwriter to address each issue.  The Company's address will be shown in the Product Disclosure Statement that contained your application form.

If you have been refused a product, it may be possible to change the terms of the policy by excluding some events (e.g. exclude mental nervous disorders from the scope of cover provided) or by charging a higher premium.

Unfortunately, there re times when companies cannot cover people without increasing the cost of the insurance (premium loading) or excluding a pre-existing condition from the cover provided.

The premium loading or exclusion relates to a statistically-based risk or likelihood that a policy holder will make a claim.  For example, a person who has some previous history of heart problems or even one or more known risk factors is more likely to suffer heart disease in the future that a person who doesn't have such a history.

Exclusions are used to remove foreseeable events or causes of claim from the cover provided.  They are intended to return the risk to average.  It is important to remember, however, that the policy will still cover all other events caused by unforeseeable illness or injury.

Premium loadings are payable in addition to the standard premium and are applied to take into consideration the increased chance that a claim will be made on the policy.  They are also designed to return the risk to average.

In some situations, however, the company might not be able to offer to cover you on any terms.  If this is the case, you should ask the company to provide you with its reasons for not accepting your application.

If you have experienced a medical condition, whether or not that condition was disabling in the past, you are statistically more likely to need to claim against your life or income insurance policy in the future.  In coming to a decision about whether to provide you with insurance and on what terms, the company can only interpret information obtained from you doctor in accordance with their underwriting guidelines.  If you feel the company's decision unfair, you should discuss your situation with your doctor.  It might be possible to get the company to change its decision if your doctor provides a more comprehensive report, particularly a report that addresses the concerns put forwards by the company in its letter to your doctor regarding your insurance application.  You might have to pay your doctor for such a report - that is it will not be rebated under Medicare.

STEP TWO - SUBMIT A COMPLAINT TO THE COMPANY

If you don't receive a satisfactory response, write to the Complaints and Disputes Resolution Manager of the company concerned.  Every company is required to have such a person and companies must observe standards set down by the Australian Securities and Investments Commission  (ASIC) in the handling of complaints, including reporting the number and type of complaint received and whether the complaint has been resolved to your satisfaction to the Australian Prudential Regulation Authority (APRA).

STEP THREE - SUBMIT  A COMPLAINT TO THE FINANCIAL INDUSTRY COMPLAINTS SERVICE

If you still don't receive a satisfactory response, write to the Financial Industry Complaints Service Limited (FICS) and they will liaise with the company on your behalf.  Note that you must go through the company's own complaints and disputes resolution process first before FICS will get involved. 

FISC can be contacted by writing to:

Telephone: (03) 9629 7050

Toll Free Telephone: 1800 335 405 (outside Melbourne)

Facsimile: (03) 9621 2291

The Financial Industry Complaints Service is an independent body and its services are free to complainants.  There are some circumstances in which the Service cannot consider your complaint.  The Service can advise you of these circumstances.

STEP FOUR - SEEK INSURANCE WITH AN ALTERNATIVE COMPANY

Although life insurance companies rely on statistical data that is commonly available in designing policies to cover specific risks and the particular acceptance parameters for each of these, in the interest of maintaining a competitive industry, some companies might be more willing to enter into a contract of insurance with you than others.  Companies are generally willing to give you an indication of the underwriting terms it might be prepared to offer you without you having to formally apply for a policy.

However, you should note that if you have been refused insurance by a company or offered cover under revised terms, you may be asked to tell other insurance companies about it depending on the type of product.

Under Australian law, you are required to provide the life insurer with all information about you that may affect the risk you are asking the insurer to accept.  If the relevant application form asks you to disclose information, you must do so.  The company may decide to offer you insurance after considering all the facts and information made available to it, including medical reports and the information you provide in your application.

STEP 5 - CONTACT THE MENTAL HEALTH COUNCIL OF AUSTRALIA

If you continue to experience difficulty in purchasing life and income insurance, please contact the Mental Health Council of Australia (MHCA).  The MHCA can be contacted at:

PO BOX 174

DEAKIN WEST   ACT   2600

admin@mhca.org.au

Phone: (02) 6285 3100

Fax: (02) 6285 2166

As a founding member of the Mental Health Sector Stakeholders (MHSS), the MHCA is currently working with other mental health organisations and the life insurance industry peak body, the The Investment and Financial Services Association (IFSA), to improve access to life insurance and income insurance for all people living in Australia, but particularly where it affects persons with common mental health problems, such as depression or anxiety.

Key organisations involved in this partnership include the MHCA, IFSA, beyondblue, Royal Australian College of GP's, Australian Divisions of General Practice, Royal Australian and New Zealand College of Psychiatrists, Australian Psychological Society, and the Australian Medical Association.

This partnership is a world first and has already lead to significant improvements in the practices of the Australian life insurance industry and has set about educating the Australian Community on the improvements the life insurance industry has made in relation to assessing life insurance applications and claims from those community members affected by high prevalence mental health disorders such as depression and anxiety.

Further information on the partnership can be found by following the link to the MHSS page.

Please note that the MHCA is not able to act as an advocate for individuals is resolving complaints regarding access to insurance.  However, we will forward all complaints we receive to IFSA and are working together to address concerned identified as systemic issues.