Some life insurers still apply blanket mental health exclusions, flouting the industry’s code of practice, a review has found.

The Life Code Compliance Committee says underwriting must be “fair, evidence-based and personalised, and cannot rely on broad or automatic exclusions for customers with a mental health condition. Our review found that there is room for insurers to improve how they identify and support customers experiencing vulnerability associated with mental health conditions.”

The committee examined six insurers that wrote 78% of all income protection and total and permanent disability covers in its 2023-24 data collection program.

It says it focused on IP and TPD because they account for most mental health-related exclusions and denials.

Two of the six insurers did not have blanket mental health exclusions or limitations on any products, demonstrating full compliance with the code.

“However, from our review of the materials, we found that the remaining selected insurers are still embedding broad exclusions for mental health conditions directly into their standard policy terms, in breach of the code and potentially raising concerns in relation to the Disability Discrimination Act 1992,” the committee said.

One insurer excluded cover under an IP policy for “any mental disorder”, without qualification.

“We expect product terms to not contain blanket mental health exclusions or limitations that automatically deny cover without an individualised assessment,” the committee said.

“Insurers must design and underwrite their products in a way that treats each customer’s circumstances fairly.”

The Financial Rights Legal Centre’s Amy Knox says the findings “have confirmed what we have suspected for a long time … that life insurers do little if anything with the information that applicants provide them and simply deny or exclude them. This is incredibly disappointing.”

Council of Australian Life Insurers CEO Christine Cupitt says the industry acknowledges there is work to be done.

“It is important that customers are treated fairly and transparently by life insurers, regardless of the condition or injury they have,” she said. “We expect that CALI members comply with the life code.”