A surge in mental illness has led to 8.5 million Australians receiving $78.9 billion in “income support” in the past year as demand rises across government, employer and insurer sources, according to a new report.

In the past decade, the number of people claiming such payments because they could not work due to injury or illness surged by 2 million.

The $78.9 billion total, from a report co-authored by the Council of Australian Life Insurers, includes life insurance (11% of the total) and workers’ compensation. It also includes social security payments, employer-funded sick leave, motor vehicle compensation schemes, veteran compensation/pensions, and early superannuation withdrawals.

CALI is calling for a co-ordinated approach led by the federal government to “respond to the productivity challenge” of mental illness.

“The surge in mental health claims is testing the income support safety net’s ability to cope because it wasn’t built with mental health in mind,” CALI CEO Christine Cupitt said.

“Without clear, co-ordinated pathways and earlier access to support across the ecosystem, Australians risk missing out on help that could make a real difference to their recovery and their connection to work.”

Life insurers paid $8.3 billion of income protection and total and permanent disability benefits to about 55,000 Australians in the year to June 2024. Mental illness accounts for about one-third of all TPD claims and 20% of income protection claims.

“By the time someone turns to life insurance, they have often moved through other parts of the ecosystem. These claims tend to be more complex and longer in duration,” Ms Cupitt said.

Find the report here.