The ACT Civil and Administrative Tribunal has upheld an insurer’s decision to refuse cover to an insurance applicant with bipolar disorder and other mental health conditions. 

The insurer, AIA, was accused of “unlawful discrimination” by the applicant, whose online application last year for a policy to cover life and trauma was immediately rejected after they pressed the “submit” option at the final stage of the lodgement process. 

But the tribunal ruled the insurer has provided “reasonable” evidence to demonstrate why its decision is sheltered by section 28 of the ACT Discrimination Act. 

The ACT Discrimination Act covers provision of goods and services but section 28 provides an exception for insurance, meaning it is not unlawful if the discrimination is “reasonable in the circumstances, having regard to any actuarial or statistical data”. 

At tribunal hearings this year AIA provided submissions to explain the policy is a direct offering that is not designed to cover for “schizophrenia, bipolar disorder, major or severe depression or other psychotic disorders” and this was reflected in the pricing. The pricing had been approved within AIA and by regulatory bodies. 

The tribunal says the nature of a Direct Product was well explained by AIA and that it was “reasonable for the respondent to manage the risks of its product in the manner that it did”. 

“The Tribunal finds that it was reasonable for the respondent to manage the risk of ‘anti-selection’ and accepts that this risk is heightened when offering a Direct Product,” the ruling says. 

“In this case, management of risk with pricing meant that what was offered was a Direct Product, being an online application process that was quick, required no medical reports, and that was consistent with the Underwriting Guidelines. 

“This meant that applications would be accepted or rejected based on automated algorithms – or ‘rules’ – which underpinned the answers as given to relevant questions. The applicant’s application for insurance was refused for this reason.” 

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