Workplace mental health claims are rising at more than twice the rate of other illnesses and injuries, according to a report from a wide-ranging group of stakeholders.

The study by Mentally Healthy Workplaces Australia finds 25.5% of workplace illness or injury absenteeism is due to mental health, and it is tipped to reach 40% by 2041-42 on current trends. This would cost the economy more than $27 billion a year.

Mental health claims have been growing at 10.6% a year – compared with 4% for other categories – since 2018, according to MHWA, which is a coalition of industry organisations, unions, governments, insurers, technologists, service providers, investors and researchers.

Workplace mental health issues already cost the economy $12 billion a year in lost GDP, the report says. Substantially reduced tax revenue and higher income support payments remove another $1.8 billion.

Almost a quarter of the economic impacts comprise workers’ compensation, insurance and direct healthcare system costs.

Lost productivity due to absenteeism, illness while still working, staff turnover and lower workforce participation accounts for more than half of the direct economic costs.

“Insurers are employers too,” MHWA executive director told Margo Lydon told insuranceNEWS.com.au. “In financial and insurance services, workplace-driven mental injury now accounts for almost half of all serious workers’ compensation claims, up 70.3% in two years.

“Life insurers are being disproportionately hit. Tighter access to the National Disability Insurance Scheme and workers’ compensation is shifting costs onto the private insurance market. Mental ill health is now the leading cause of total and permanent disability claims, with almost one in three claims paid.

“As life insurers know, cost shifting does not reduce the cost. It only shifts it to other parts of the system, where it grows. As premiums rise, the cost lands back on employers, workers, insurers and government.”

Professor Lydon says the report highlights the urgency of tackling Australia’s workplace mental health crisis differently, and she points to the 1992 national road safety strategy, investing in evidence, education, infrastructure and regulation, as an example. Road deaths fell by 60% over the next 30 years.

She says workplace mental health requires the same long-term, co-ordinated, system-wide approach, and calls on life insurers to work with MHWA members to “co-design prevention-led, evidence-based solutions to the most costly and complex workplace mental health and safety issues facing Australian workers”.

With $12 million in funding secured during its establishment phase, MHWA says it is spearheading research and placing Australia at the global forefront of workplace mental illness prevention.

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From the latest Insurance News magazine: A mental health check for the industry – see the results of our latest wellbeing survey

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