This determination found a general exclusion for claims arising from a first presentation of mental illness during the period of travel insurance cover offended the Disability Discrimination Act 1992 Cth (the DD Act).
The applicant had taken out travel insurance with the financial services provider (FSP). During his trip, whilst overseas, he suffered a manic episode and lodged a claim on the policy, resulting in hospitalisation.
The FSP denied liability for the claim relying on a policy general exclusion for claims arising from or in any way related to depression, anxiety, stress, mental or nervous conditions (blanket exclusion).
Mental illness is a disability
The panel determined that the applicant’s mental illness was a disability.
A disability under section 4 of the DD Act is defined to include a disorder, illness or disease that affects a person’s thought processes, perceptions of reality, emotions or judgement or that results in disturbed behaviour. This includes a disability that currently exists, previously existed or may exist in the future.
Mental illness exclusion discriminated against the applicant
Under sections 5 and 6 of the DD Act, discrimination means to treat a person with a disability differently to a person without a disability and includes both direct and indirect discrimination.
The panel found the general exclusion relating to mental illness within the FSP’s policy, discriminated against the applicant as it sought to treat a person who developed a mental illness during the period of insurance differently from how it treated a person without a mental illness.
General exclusion for mental illness was unlawful
Section 24 of the DD Act makes it unlawful for a person who provides goods or services, to discriminate against another person on the ground of the person’s disability:
- by refusing to provide the other person with the goods or services
- in the terms and conditions in which those goods and services are provided or
- in the manner in which the person provides the goods and services or makes those services available.
The panel determined that the FSP provided the applicant with services relating to insurance.
The panel found that the exclusion offended the DD Act as it discriminated against the applicant in the terms and conditions of the policy and the manner in which it made the services available.
Therefore, the panel determined that the general exclusion relating to mental illness was unlawful.
FSP did not establish unjustifiable hardship
In arriving at its decision, the panel considered if avoiding the discrimination would impose an unjustifiable hardship on the FSP. Section 29A of the DD Act provides that it is not unlawful to discriminate on such grounds. The burden of proving unjustifiable hardship lies with the FSP in accordance with section 11 of the DD Act.
The panel determined the FSP had not established it would suffer unjustifiable hardship based on information presented by the FSP.
FSP did not establish exemptions under section 46 of the DD Act
The panel also considered whether any exemptions would apply to the circumstances.
Section 46(2) of the DD Act provides that it is not unlawful for a person to discriminate against another person, on the ground of the other person's disability, in respect of the terms or conditions on which a policy of insurance is offered if the discrimination:
- is based upon actuarial or statistical data on which it is reasonable for the FSP to rely and the discrimination is reasonable having regard to the matter of the data and other relevant factors or
- where no such data is available and cannot reasonably be obtained, the discrimination is reasonable having regard to other factors.
- The panel did not consider the FSP had established that any exemptions applied. It found it was not reasonable for the FSP to rely upon the actuarial and statistical data it referred to because:
- the FSP was unable to provide its own actuarial data specific to this risk category
- the general statistical data submitted did not refer to or assess the risk undertaken by the FSP associated with first presentation mental illness
- the FSP was unable to present any data it relied upon when it first introduced the exclusion to the policy
- the data provided was not accompanied by any evidence that the FSP actually relied upon on it to introduce and maintain the exclusion.
Discrimination was not reasonable
The panel accepted that an exclusion which limited cover for a pre-existing medical condition or mental illness may be reasonable in certain circumstances, given a greater likelihood of a claim. The panel distinguished this from the general exclusion relied upon by the FSP as it was a blanket exclusion.
The FSP on this occasion did not submit any other relevant factors to justify the exclusion. The FSP only provided information on general studies into mental health and the prevalence of the condition.
Therefore, the FSP was not entitled to rely upon the general exclusion to refuse payment of a majority of the claim.