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Wednesday, 28 March 2018
Page: 2458


Senator O'NEILL (New South Wales) (17:07): On behalf of the Chair of the Parliamentary Joint Committee on Corporations and Financial Services, I present the report on the life insurance industry, together with the Hansard record of proceedings and documents presented to the committee.

Ordered that the report be printed.

Senator O'NEILL: I move:

That the Senate take note of the report.

The Parliamentary Joint Committee on Corporations and Financial Services has landed a unanimous report on the life insurance industry. The life insurance industry plays a critical role in the lives of everyday Australians. Pricing risk is a fundamental and necessary dimension of life insurance, particularly to make sure that life insurance remains viable and sustainable. Life insurance must also serve its purpose. Risk is spread across an entire pool of individuals. What has become clear through the course of the committee's proceedings is that, at the moment, the type and extent of information accessed by life insurers to assess risk has a potential to reach a point whereby insurance is no longer serving its purpose. More than this, the type and extent of information accessed by life insurers is causing individuals to trade off financial stability, which could be secured through life insurance, against their health, whether through an insurer's broad ability to access medical information, an insurer's misuse of information on an individual's mental health experience or an insurer's discrimination against individuals who have undertaken potentially life-saving genetic testing.

Any role life insurers have that undermines the health-seeking behaviours of Australians cannot remain. Currently, many limitations and barriers exist around access to health treatment, particularly around mental health. Once an individual steps forward to seek help, they need to access appropriate services, and do so in a timely manner. Life insurers are presenting an additional barrier. We need to manage the reality that those who take proactive steps to better health cannot continue to be locked out of the life insurance market and dissuaded from taking positive health action.

The report has achieved a sensible balance for the benefit of Australians more broadly, and for the life insurance industry as well. During the inquiry, we learnt that by simply ticking a box Australians making a claim for life insurance can provide their entire medical history, sometimes inadvertently, to their insurer.

This includes intimate details about any health issue they have ever had, including information that may not be relevant to their claim. The Royal Australian College of General Practitioners estimated that entire medical records are provided in around half of the cases. Very concerningly, we learnt that some life insurers could not even tell us how many complete medical records they had in their possession. The RACGP's Dr Seidel expressed that—and I don't think he could have put it any more clearly—'a patient's medical record is not a tradeable commodity'.

The practice of assessing whole medical records is not sustainable. It impacts on health outcomes for patients. In response to the concern that patients may be at risk of insurers misusing the information that they receive, doctors are now under recording information that their patients provide to them. The tone and the language of the current FSC code do not reflect assertions by the industry that full medical records are rarely required. Again, individuals should not have to trade off financial sustainability that could be secured through life insurance for their health and wellbeing.

Throughout the proceedings it also became evident that insurers do not know what to do about mental health. The issue of access to mental health services is a very significant one. Access to life insurance if you've ever had a mental ill-health experience is even worse. Not only do denials occur but insurers are applying unnecessarily broad exclusions. For instance, a mother who has experienced postnatal depression could have a complete mental health exclusion applied to her insurance policy. A period of situational mental ill-health, such as an episode of depression occurring from grief, should not be treated by insurers in the same way as schizophrenia or bipolar. These practices, however, continue.

We know that not all mental health problems persist into adulthood. Mental ill-health can be situational and episodic, but some life insurers are not appreciating this in any way. They rely on outdated mental health stereotypes. Many of them are bringing together work stress, anxiety, depression and schizophrenia without appreciating the full spectrum of mental health challenges. This has to change. The signal that denial of life insurance sends is in very significant contrast to our public health message of hope and recovery. We need to encourage people to seek treatment, not to avoid it because of insurance.

Beyond the loss of financial stability, fear of refusal of insurance is causing real cost to the health of Australians, including our young people. The committee received evidence that fearful parents are doing anything they can to avoid their children getting mental health notes recorded because the parents are concerned about the insurance implications for those young people later in life. This is very concerning given that 75 per cent of mental illness will be diagnosed by the age of 25 and 50 per cent will be known by the age of 14.

Concerns about mental health exclusions were initially raised with me by tradies and small business owners on the Central Coast who had experienced a period of mental ill-health and were then denied income protection vital for the financial security of their families and businesses. But it's much more broadly spread than just for income protection. Nearly half of the Australian adult population will experience a mental illness at some point of their life and less than half will access treatment. Let's be clear. The insurance industry has been part of the reason Australians are choosing not to seek help for mental ill-health. It is simply untenable that people are avoiding mental health care due to the fear of discrimination. It's undermining collective efforts by dedicated individuals, organisations and governments to improve the health and wellbeing of Australians.

Similarly, evidence was presented that life insurers are impacting people's desire to undertake potentially life-saving genetic testing. Evidence presented to the committee indicated that an individual's genetic information can be used by insurers to charge a higher premium, exclude insurance cover for certain conditions or deny insurance entirely. This has occurred even in instances where individuals have taken proactive steps to reduce the likelihood of having a certain condition. Currently, we know that genetic tests vary in accuracy and quality, and in some instances they are conducted without health professionals. Interpretation of results can be the subject of debate amongst clinicians, let alone amongst insurers, yet life insurers treat all results in the same manner and are arbitrarily dealing with diagnosis, not with prognosis.

The misuse of genetic information by life insurers has meant that some Australians are not undertaking the BRCA gene or Lynch syndrome tests, for instance. These tests could allow these Australians to mitigate or avoid the onset of symptoms. The treatment of genetic information by life insurers has consequences beyond Australians not undertaking the tests themselves. This is very concerning. It is impacting research around public health and preventative methods. Some individuals are not participating in research trials because of concerns about discrimination by life insurers.

I'd like to close with a few necessary acknowledgments. Can I thank the chair, Steve Irons, the Liberal and Labor senators who participated in this inquiry and Senator Whish-Wilson. I'd particularly like to thank Matt Keogh, Terri Butler and Senator Ketter from the Labor team—together we worked really hard to get a great outcome here. Can I also acknowledge the excellent work of the secretariat, led by Patrick Hodder, and also John Bell for bringing this report together. It was a long process, and it took a lot of dedication. I'd also like to thank the life insurers, the advocacy groups, the people from the mental health sector and the geneticists who gave us the benefit of their considerable knowledge. I hope that this report will play a significant role in revitalising the insurance industry and that the steps we've recommended will go to improving the quality of the experience of life insurance for Australians. I seek leave to continue my remarks later.

Leave granted; debate adjourned.