Mental health groups have accused the life insurance industry of ignoring calls to address discrimination, saying its treatment of people with mental health conditions is unethical and potentially unlawful.
In submissions to a powerful parliamentary inquiry, beyondblue and Mental Health Australia – who have long campaigned against insurance discrimination – said the industry's exclusion of people with mental health symptoms was discriminatory and not based on any assessment of an individual's condition.
"It is unethical, and potentially unlawful, for life insurers to offer policies with broad, blanket exclusions for any type of mental health condition in the absence of robust actuarial and statistical data," Mental Health Australia chief executive Frank Quinlan said.
Beyondblue chief executive Georgie Harman said the group had been working with the insurance industry since 2002 "in good faith" on the issue but very little had changed.
She said efforts to engage with industry group the Financial Services Council as recently as October this year had failed, with the group's "Code of Practice" failing to include mental health standards.
"Despite all efforts over many years we continue to hear negative experiences of the insurance industry from everyday Australians affected by depression and anxiety," she said in the submission.
"And we continue to hear the same, often contradictory, reasons from the industry in reply."
Ms Harman said the industry's "one size fits all" approach in assessing mental illness was unfair and harmful.
"In addition to infringing on people's access to insurance products, it creates a ripple effect of reinforcing self and community stigma," she said.
A joint Fairfax Media- Four Corners investigation into the Commonwealth Bank's insurance arm CommInsure last year revealed how the bank delays and dodges paying legitimate mental health claims.
It also revealed how CommInsure underwriters were told to be on the lookout for risk factors in customers that might foreshadow future mental health problems, even in people with no history of such issues.
The FSC pledged in October to address mental health issues, but only in a new version of its code "in 18 months' time".
Mr Quinlan said efforts to work with the industry over a decade had "limited impact".
"Insurers continue to make spurious use of health information to justify refusing insurance or rejecting claims," he said.
"This highlights the need now for more rigorous reform and oversight of the industry by the Australian Securities and Investments Commission and other relevant agencies."
The life insurance inquiry was referred to the joint parliamentary committee on corporations and financial services in September. It is tasked, among other things, with examining whether companies are engaging in unethical practices to avoid paying out claims. It is due to report by June 30.
A test case for mental health discrimination has already played out in the travel insurance sector, with QBE forced to compensate Melbourne University student Ella Ingram $20,000 in 2015. VCAT ruled the company breached the Equal Opportunity Act by denying Ms Ingram's claim due to her depression.