Life insurers cannot resolve their conflict of interest in decisions about rehabilitation and treatment of injured workers and should not be allowed direct influence over medical bill payment, law firm Slater and Gordon says.

The criticism comes after Superannuation and Financial Services Assistant Minister Jane Hume appeared to signal tentative support for a change in the law so Total and Permanent Disability (TPD) insurers pay the medical bills of a worker instead of paying out the insurance claim.

“Insurers aim to maximise profits,” Slater and Gordon says. “It is likely they would only agree to assisting people with treatment when it is financially beneficial for them to do so. This is an unresolvable conflict of interest.”

Ms Hume said both Treasurer Josh Frydenberg and Health Minister Greg Hunt are open to the idea of changing the way TPD is paid. The proposal was rejected by a parliamentary joint committee in 2018.

Allowing life insurers to “dictate” treatments instead of paying disability income and lump sums was not a solution to the nation’s growing mental health crisis, Slater and Gordon State Practice Group Leader Sarah Snowden said.

“There is a very good reason that the Health Insurance Act prohibits life insurers from dabbling in the provision of health services,” she said.

“It puts the claimant in a position of disproportionate disadvantage.”

She says some insurers don’t comply with the current FSC Life Insurance Code of Practice, and while there has been some improvement recently, there is “still a long way to go to in terms of code compliance, especially around delays in making decisions to accept and pay claims”.

“I have serious concerns about how this would be regulated,” Ms Snowden said.

“This renewed push is a totally inappropriate interference with treating doctors in order to pressure workers back to work or to otherwise minimise costs.”