A 21-year-old woman has taken QBE to the Victorian Civil and Administrative Tribunal over its blanket exclusion of mental illness in its travel insurance policy – in a case that could have widespread ramifications for the industry.

Ella Ingram was 17 when she was refused a payout of about $4000 for a cancelled school trip to New York after developing depression.

QBE’s travel insurance does not cover this, even if the illness is not pre-existing.

Ms Ingram’s lawyer says the exclusion is unlawful under the Victorian Equal Opportunity Act. 

QBE’s lawyers argue the company would suffer “commercial hardship”, because too many people suffer mental illness, making it financially unviable to cover.

Nearly half of Australians will suffer mental illness in their lifetimes.

A review of 35 travel insurance policies by consumer group Choice found only two insurers – Bupa and CGU – cover mental illness, but they will not pay claims for “disinclination for travel” due to mental illnesses including depression, nervousness and anxiety. 

The Insurance Council of Australia was reluctant to talk to insuranceNEWS.com.au about the issue, except to say it is “committed to working with its members and healthcare advocates to continue to improve access to general insurance products for people with mental health issues”.

IAG spokesman Natalie Pennisi told insuranceNEWS.com.au CGU’s terms and conditions apply to all medical cover, whether physical or mental.

She says if a mental health condition is known, a customer must apply to have approved pre-existing medical cover before travelling.

“If the condition was not known when a customer purchases travel insurance, but is developed prior to departure of a trip, the insured is required to provide medical information and doctors’ advice to support a claim,” Ms Pennisi said.

She says like all travel policies, there are exclusions – and she emphasises the importance of reading the entire policy.

QBE’s blanket exclusion on mental health featured on page 30 of the policy document, and Ms Ingram’s mother says she only got to page three.

Mental Health Australia CEO Frank Quinlan told insuranceNEWS.com.au insurers’ reluctance to cover mental illness stems from “ignorance and stigma”.

We are all on the spectrum of mental illness and for most people it is a “trivial experience”, he says. “[Insurers] seem to have little understanding of how mental illness manifests itself.”

Mr Quinlan says Ms Ingram’s case and subsequent public outcry suggest insurance has some catching up to do.

He says insurers have an “outdated” and “prejudicial” view, and mental illness should be treated like physical illness.

“We don’t exclude children who have a cold because they may get asthma.”

He says insurers need to conduct analysis on the “actual risks”.

“They haven’t come to terms with the modern reality of mental illness and are treating it as a life sentence.”

He says insurers that take an evidence-based approach will open up new and profitable markets.

Mariana Cidade from underwriting agency Accident & Health International told insuranceNEWS.com.au the company’s travel policies exclude pre-existing conditions, whether physical or mental.

“Our product disclosure statements outline the extent of cover, and as with most travel insurance policies available in the market, there are general exclusions that apply,” Ms Cidade said.