Insurer Prevails in Dispute Over Misrepresentation of Mental Health

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

The dispute arose when the complainant made a claim on her total and permanent disability (TPD) policy for major depression. In response, MLC (the insurer) decided to amend the policy by adding an exclusion for mental illness, effectively denying the claim.

The insurer argued that it was within its right to add the exclusion because the complainant had misrepresented her mental health history when applying for the policy in March 2015.

Upon reviewing the application form, it was discovered that the complainant failed to disclose her use of anti-depressant medication and provided incorrect answers to questions regarding her mental health.

Misrepresentation of Mental Health

One of the questions on the application form asked whether the complainant had ever experienced or sought advice for anxiety, stress, or sleeplessness. The complainant answered "No," despite having a history of depression and taking medication for it.

The Australian Financial Complaints Authority (AFCA) determined that this answer was a misrepresentation.

The complainant also provided a false answer to another question regarding the use of medications in the last five years. Despite her two-year history of depression and recent medication use, she answered "No" to the question.

AFCA concluded that these misrepresentations were significant in the insurer's decision to add the exclusion for mental illness.

Ruling in Favor of the Insurer

The complainant argued that she was unaware of her depression diagnosis and believed her medication was intended to improve her mood, rather than treat depression.

However, AFCA rejected her explanation, noting that she had sought treatment for "anxiety-related condition" and had taken medication to improve her mood.

AFCA ruled in favor of MLC, stating that the insurer demonstrated the intent to add a mental illness exclusion even without the complainant's misrepresentations. The ombudsman also noted that other insurers would have made similar decisions.

Published:Tuesday, 5th Dec 2023
Author: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Insurance News

Clear

Australian Farmers Confront Rising Insurance Premiums Amid Climate Challenges

22 Mar 2026: Paige Estritori

Australian farmers are currently grappling with a significant surge in insurance premiums, with increases ranging from 20% to 40%, depending on the insurer. This escalation is primarily driven by the rising frequency and severity of natural disasters, coupled with a contracting underwriter market and escalating costs of goods and services. - read more

Widespread Rural Crime Exposes NSW Farmers to Repeated Victimisation

22 Mar 2026: Paige Estritori

A recent survey conducted by WFI Insurance in collaboration with the University of New England (UNE) Centre for Rural Criminology has unveiled alarming statistics regarding rural crime in New South Wales. The findings indicate that over 90% of NSW farmers have encountered criminal activities on their properties, with approximately 30% reporting being targeted seven or more times. - read more

Elders Insurance Highlights Increased Summer Storm Risks for Farmers

22 Mar 2026: Paige Estritori

As the Australian summer approaches, Elders Insurance has issued a cautionary advisory to farmers, emphasising the heightened risk of storm-related damages during this season. Recent data indicates a significant increase in insurance claims due to summer storms, underscoring the need for proactive measures to safeguard agricultural assets. - read more

Government Backs 12 Projects to Boost Heavy Vehicle Safety

22 Mar 2026: Paige Estritori

The Australian Government, in collaboration with the National Heavy Vehicle Regulator (NHVR), has announced a $4.2 million investment in 12 industry-led projects designed to improve heavy vehicle safety across the nation. This funding is part of the Heavy Vehicle Safety Initiative (HVSI), which has supported over 181 projects with more than $45 million since its inception in 2016. - read more

Climate Change's Impact on Rising Home Insurance Premiums

22 Mar 2026: Paige Estritori

In recent developments, Insurance Australia Group (IAG) has raised concerns about the escalating impact of climate change on home insurance premiums. The insurer's latest report indicates that Australians should anticipate higher costs due to the increasing frequency and severity of weather events. - read more

Click for more Insurance News