Strengthening Mental Health Coverage: Insights from the Life Insurance Code of Practice Review
Addressing the Need for Fair and Individualized Underwriting Practices
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The interim report of the ongoing review of Australia's Life Insurance Code of Practice has highlighted significant concerns regarding the industry's handling of mental health coverage.
Led by financial sector expert Peter Kell, the review emphasizes the need for insurers to adopt fairer and more individualized underwriting practices when assessing applicants with mental health conditions.
The Life Insurance Code of Practice is an initiative by the life insurance industry aimed at providing protection that suits Australians when they need it most, in an accountable and transparent way. The independent review, which began on 1 October 2025, involves deep engagement with the community, consumer advocates, and regulators to ensure the Life Code remains strong, relevant, and trusted.
The interim report suggests that proposed changes to mental health cover represent a step back from the industry's current commitments. It calls for insurers to enhance their mental health coverage and ensure that underwriting practices are fair and individualized, rather than relying on blanket exclusions or limitations.
In response to the interim findings, the life insurance industry is expected to consider adjustments to their policies and practices to better support individuals with mental health conditions. This includes providing clearer information to consumers, improving transparency in underwriting decisions, and ensuring that policy terms are fair and reasonable.
The final report of the review is anticipated to provide further recommendations aimed at strengthening the Life Insurance Code of Practice and enhancing consumer protection, particularly in relation to mental health coverage.
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Knowledgebase
Indemnity: A legal principle that stipulates that insurance policies should restore the insured to the financial position they were in before the loss.
