Insurance exclusions for people with mental health issues are discriminatory, the Financial Ombudsman Service (FOS) says.

Lead Ombudsman General Insurance John Price told insuranceNEWS.com.au all relevant stakeholders must unite to establish a way forward on the matter.

Such exclusions – along with wider issues of how people with mental health conditions are treated in the claims process and how they cope with natural disasters – were debated in a breakout session at the FOS conference last week.

Mr Price confirmed FOS works on “a significant number” of disputes concerning mental health exclusions.

He says the service always takes the view that an insurer must have actuarial data to back up such discrimination.

“In each case where this has been raised by FOS, the insurer has paid the claim,” he said.

He says during the debate, the Insurance Council of Australia admitted no such actuarial data exists.

As previously reported by insuranceNEWS.com.au, FOS’ annual review shows overall general insurance dispute numbers increased 19% last financial year to 10,588 received. 

Mr Price says disputes are “still coming through in record numbers” and a lack of resources is part of the problem.

“All financial services providers with problems talk about how they are under enormous pressure,” he said. “There are record numbers of claims, and delays in claims-handling.

“Today’s society is much more aware of people’s right and ability to lodge a complaint.

“Also, the general insurance industry does not seem to have adapted well to our new system. Organisations are struggling to cope and we are working with them on that.”

Mr Price says if one insurer receives a significant number of complaints, then it is investigated further. “We will consult with that organisation and if we believe the problem is systemic, then we are obliged to investigate.”

This may include reporting the issue to the Australian Securities and Investments Commission, he says.