Insurance and mental illness: Prospects for change

Abstract

An insurer's discretion to both freely allocate different premiums to consumers and deny cover to overly risk consumers is essential for the insurance sector's sustainability. This discretion conflicts with a consumer's right to be free from discrimination, protected by the Human Rights Act 1993. Both a dearth of judicial decisions favouring the consumer and an archaic legal position around pre-contractual non-disclosure obligations have tipped this conflict in favour of the insurer. This paper considers two distinct forms of discrimination towards sufferers of mental illness and analyses two prospects for change. Firstly, this paper considers how the unjustifiable reliance on blanket exclusion clauses to avoid indemnifying sufferers of mental illness may be challenged by Ingram v QBE Insurance (Australia) Limited (Human Rights) [2015] VCAT 1936. Secondly, this paper considers how legislative reform can remedy New Zealand's common law position around pre-contractual non-disclosure, a position currently resulting in indirect discrimination towards mental illness sufferers. Ultimately, this paper concludes that the implications of Ingram v QBE Insurance are more symbolic than practical. However, if drafted effectively, legislative reform is a viable prospect for overcoming forms of discrimination.