Consumer advocates have pushed back on life insurers’ bid to lift a code restriction on blanket exclusions for mental health cover.

“Any attempt to remove it will … be seen to be a backward step in consumer protections because it will make less clear to consumers where they stand and consequently lead to poorer outcomes,” the advocates say in a joint submission.

Their call is a response to code reviewer Peter Kell’s interim findings, released last month, which included a supplementary submission from the Council of Australian Life Insurers setting out the industry’s preferred position on mental health cover.

Under the current life code, insurers are required to design products that do not contain blanket exclusions specific to mental health in standard form contracts.

The council said life insurers’ commitment to comply with the Disability Discrimination Act – which was in the earlier 2017 code – should be reinstated.

The act has exemptions allowing an insurer to refuse cover to a person with a disability or to offer different prices or terms if their decision is based on actuarial data that is considered reasonable.

CALI says there has been a “continuation of … significant and ongoing increases in mental health claims and related increases in premiums” since 2023, when the code introduced the restriction on blanket bans for mental health cover.

“As this trend continues, and without change, premiums are likely to increase for all customers, which will further limit access to affordable cover,” the council said.

Mr Kell said CALI’s proposed change represents “a step back” from the industry’s current commitments.

The joint submission was made by the Financial Rights Legal Centre, Dr Jane Tiller and the Justice and Equity Centre.