Workplace rehabilitation firm Rehab Management says an increase in mental health-related insurance claims driven by the coronavirus pandemic is likely to continue due to on-going impacts from the outbreak.

“Over $1.5 billion is paid annually in workers’ compensation and life insurance claims for work-related mental health conditions and we are already seeing the significant impact of COVID-19 in this area,” CEO Marcella Romero said.

“Our indicators show that psychological insurance claims have continued to steadily rise since the start of the pandemic.”

Ms Romero says since February there has been a 35% increase in claims related to areas such as anxiety, depression, post-traumatic stress and other mental disorders.

“We expect this rise to continue especially as we approach various milestones during this crisis, such as a reduction in financial support from government or lending institutions, extended lockdowns, further job losses and other flow-on effects,” she said.

Australia’s economy contracted 7% in the June quarter, the largest quarterly fall since records began in 1959, the Australian Bureau of Statistics said today. The latest figure confirms the nation entered its first recession since the early 1990s.

Economic figures for the September quarter will include the impacts of the second wave outbreak in Victoria and Melbourne’s lockdown under tougher Stage Four restrictions.

Rehab Management says data from its mental health screen tool, used by companies to monitor employee wellbeing, shows Victoria is hard-hit by current circumstances.

National wellbeing data indicates an average score of 41, while the Victorian score shows an average of 39.

“This is low compared to what you would expect to see for a general population which is a score of 50,” Ms Romero said.

The pandemic has required employers to rethink the safety of their employees, but many do not understand that mental health is a huge part of worker health and safety and that it has consequences for businesses, she says.

The Financial Services Council has said life insurance sector income protection losses have been driven by a surge in the number and duration of claims, especially for mental health conditions.

“We expect mental health claims to increase in the months and years ahead from the effects of the COVID-19 pandemic on the economy, exacerbating people’s isolation and financial hardship.” Senior Policy Manager for Life Insurance Nick Kirwan said last week.