Tribunal finds life insurance rejection 'discriminatory' but rules exemption applies

A company that denied life insurance to a disabled person has been found to be covered under an exemption to anti-discrimination legislation.

In November 2022, the Human Rights Commission referred a complaint from a de-identified disabled person to the ACT Civil and Administrative Tribunal (ACAT).

ACAT held hearings in February 2023 and July 2023, and released its ruling this month.

The applicant claimed that they were refused insurance coverage due to their disability of ”bipolar affective disorder, mild non-psychotic querulous paranoia, and obsessive-compulsive disorder”.

Neither party disagreed on several points, with the ruling focused on whether the company had a valid exemption under anti-discrimination legislation.

These agreed points included the applicant’s disability, that the insurer had to prove it had standing for its exemption and that the company had “treated the applicant unfavourably because the applicant has a protected attribute”, according to the ACAT ruling.

The ruling said the exemption is found in the Discrimination Act 1991, whereby one’s conduct can be found to have been ”reasonable in the circumstances, having regard to any actuarial or statical data on which it is reasonable for [the respondent] to rely”.

According to their witness statement from December 2022, the denial was near automatic after they completed the online form for the life insurance product from AIA Australia.

“I contend, the respondent did not read and rely on any statistical and actuarial data while making a decision of refusing to offer me the insurance cover [be]cause the decision of rejection or refusal was very quick,” they said.

In their witness statement, the applicant also said AIA did not know specifics about their circumstances when they applied.

“I believe the respondent came to know about my exact protect attribute (bipolar) because of my complaint to the ACT HRC.”

ACAT found that the applicant faced “discriminatory conduct” when their insurance application was denied and the impact of remaining uninsured was “a significant issue”.

The applicant had applied for a Direct Product, which is a policy that a customer can apply for themselves without needing to go through a third-party intermediary.

According to a submission to ACAT from the insurer, these products are not always evaluative of the full picture.

“Direct products are designed to provide customers with the opportunity to provide a quick, tailored quote without the need to consult an adviser (sic) and undertake a potentially lengthy underwriting process,” a submission from AIA was quoted in the ruling as reading.

“They provide standard insurance cover to people that represent relatively low risks.”

An AIA employee’s cited evidence said that a ”Yes” answer to a question about the diagnosis of any of several mental health conditions would result in an application being automatically declined.

The employee also said that further information would be needed before AIA could proceed with the application, but that could not be provided through the online application for the Direct Product.

In oral evidence given to ACAT, the applicant said they came forward with their complaint because of the speed with which their insurance application was denied and that AIA did not know about their diagnoses or personal circumstances when the application was denied.

According to information submitted by AIA to ACAT, the product “did not provide cover for ”schizophrenia, bipolar disorder, major or severe depression or other psychotic disorders”, which the insurer said was a reasonable decision, given the higher ”mortality and morbidity risks” faced by those living with these mental health conditions.

However, the insurer acknowledged that the Product Disclosure Statement did not list the conditions that would see an application denied, including medical conditions.

ACAT ordered the application dismissed, but the ruling acknowledged that similar cases could be subject to concerns.

“While the refusal to insure and the manner by which it was conveyed may not have been therapeutic for the applicant, or illustrative of a sensitive customer service, it was not unlawful discrimination.

“Other circumstances in another case may lead to another conclusion.”