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: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

Share this news item:

Insurance News

Clear

Vero’s New Strata Product Signals a Shift in Cover Placement

27 Jun 2026: Paige Estritori

Vero has entered the residential strata market with a new nil-commission product, initially launching in Far North Queensland and Darwin before a planned national rollout. The move is significant for owners corporations, strata committees and managers because these northern regions are among the most challenging areas in which to secure affordable and suitable building cover. - read more

What Delta’s Digital Insurance Launch Means for Small Operators

27 Jun 2026: Paige Estritori

Delta Insurance’s move onto Ebix Australia’s Sunrise Exchange is more than a technology update. For Australian small businesses, including domestic and home service operators, it points to a broader shift in how specialist insurance products are being accessed, compared and placed through the broker market. - read more

What Broker Growth Means for Personal Trainer Insurance

27 Jun 2026: Paige Estritori

New industry research has underlined just how central brokers have become to Australia’s general insurance market, with broker-placed business accounting for $35.6 billion in gross written premiums in the year to 30 June 2025. That represents about 46% of all general insurance written in Australia, within a total market of $77.9 billion. - read more

NEOS Underwriting Upgrade Points to Faster Cover Decisions

27 Jun 2026: Paige Estritori

NEOS has moved further into digital underwriting with the implementation of UnderwriteMe’s Decision Studio, a technology designed to improve how medical data is captured and assessed across its life insurance products. The development, announced in late June, reflects a broader shift in the Australian life insurance market: insurers are looking for faster, more consistent ways to assess applications without losing sight of fairness, accuracy and customer experience. - read more

New FY27 Property Outlook Signals a More Selective Market for Landlords

27 Jun 2026: Paige Estritori

Domain’s latest FY27 housing market forecast, covered by Property Update on 25 June 2026, points to a more fragmented Australian property cycle than many landlords have faced in recent years. Rather than a broad national upswing, the outlook suggests performance will increasingly depend on city, dwelling type, affordability and local supply conditions. - read more

Click for more Insurance News