Insurer Prevails in Dispute Over Misrepresentation of Mental Health

4

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
Source: Paige Estritori

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

Share this news item:

Insurance News

Clear

Envest Group Unveils TLI Underwriting for Heavy Motor Fleets

31 Dec 2025: Paige Estritori

Envest Group, a prominent player in Australia's insurance sector, has announced the launch of TLI Underwriting, a new agency dedicated to providing specialised insurance solutions for heavy motor fleet operators. This strategic move aims to address the unique challenges faced by larger transport businesses in Australia. - read more

IAG Boosts Profit Forecast Post-RACQ Insurance Acquisition

31 Dec 2025: Paige Estritori

Insurance Australia Group (IAG) has announced an upward revision of its annual profit forecast, attributing the increase to the recent acquisition of RACQ Insurance. The company now anticipates a reported insurance profit ranging between $1.55 billion and $1.75 billion for the financial year, marking a $100 million enhancement from the previous estimate. - read more

NTI Report Highlights Human Error as Leading Cause of Major Truck Crashes

31 Dec 2025: Paige Estritori

The National Truck Accident Research Centre (NTARC), supported by National Transport Insurance (NTI), has released its latest Major Incident Investigation Report, shedding light on the predominant causes of significant truck crashes across Australia. The findings underscore the critical need for targeted interventions to enhance road safety within the transport industry. - read more

Hutch Underwriting Launches Comprehensive Professional Indemnity Insurance for Tradies

31 Dec 2025: Paige Estritori

Hutch Underwriting has unveiled a revamped professional indemnity (PI) insurance policy tailored specifically for tradespeople, including electricians, carpenters, and painters. This innovative coverage consolidates protection against advice, design, and incidental cyber exposures into a single, streamlined solution. - read more

Australian Builders Reassess Insurance Strategies Amid Escalating Construction Costs

31 Dec 2025: Paige Estritori

The Australian construction industry is currently grappling with significant cost increases, driven by persistent supply chain disruptions and a shortage of skilled labour. These challenges are compelling builders to reevaluate their insurance strategies to effectively manage heightened financial risks. - read more

Click for more Insurance News