Australia’s life insurers will develop a new industry action plan for mental health, aimed at supporting long-term affordability and industry sustainability and delivering greater clarity, fairness, and transparency for customers.
In consultation with industry, medical and workplace experts, a new assessment framework for mental health claims is being developed by the Council of Australian Life Insurers (CALI) over the next 12 months.
This work is part of an industry-wide effort to better align disability insurance cover with contemporary medical evidence and return-to-work practices.
CALI CEO Christine Cupitt said life insurers have a responsibility to act on the growing mental health crisis, and the new framework will bring greater consistency across the industry.
“We have listened to feedback from customers and consumer advocates who feel the claims process can be more transparent and easier to understand. Our goal is to ensure an experience that is fair, transparent, and consistent for every Australian, no matter which insurer a customer turns to,” said Ms Cupitt.
Mental health conditions are now the fastest-growing cause of life insurance claims.1
Nearly one in two Australians will experience mental ill-health in their lifetime2, and four in five working Australians worry mental health challenges could affect their ability to work and manage financial commitments.3
Younger Australians aged 18-34 years are even harder hit, with almost three in five at risk of, or experiencing, burnout4 and one in four reporting severe psychological distress.
Ms Cupitt said life insurers would always be there for people who are most deeply affected by mental ill-health, but clarity was needed about the role life insurance could play.
“Australia is in the middle of a national mental health crisis, and we need to set clear, evidence-based guidance about the support life insurers provide,” she said.
“Insurers will always be there to help Australians with severe conditions that prevent them from working, but like the NDIS or workers’ compensation schemes, we can’t be the answer for every case.”
CALI will establish an expert panel to provide technical advice on the framework, drawing on medical practitioners, legal specialists, rehabilitation and return-to-work experts, life insurance practitioners, and people with lived experience.
A three-month targeted consultation will be held in early 2026, engaging consumer representatives, mental health advocates, superannuation trustees, financial advisers, and medical professionals.
As part of its work, the industry may look at contemporary medical evidence and return-to-work practices to see if the new approach could provide clarity or support in other similar claim scenarios or circumstances.
The framework is being developed in accordance with CALI’s competition law protocols and is subject to any regulatory approvals that may be required.
The work will run in parallel with the current independent review of the Life Insurance Code of Practice (Life Code) led by Peter Kell, will release a public consultation paper on 17 October and is due to conclude on 30 June 2026.
The new framework will be informed by the outcomes of the Life Code review, which is examining how the Life Code supports customers with mental health conditions, and CALI will engage with Mr Kell during its development.
“Together, the Life Code review and the development of a new disability assessment framework will strengthen how Australians are supported when facing mental health challenges and give Australians confidence that life insurance will be there when they need it most,” Ms Cupitt said.
Building on this commitment, the new industry action plan will:
- provide clarity and transparency to customers by creating a framework that will establish minimum standards for consistent, evidence-based thresholds to better assess mental health claims against
- align where possible, industry guidance and approaches on disability insurance to other income support systems in Australia
- clarify the purpose of disability insurance and better reflect contemporary medical evidence and returnto work outcomes
- set industry principles on disability insurance that can help achieve genuine indemnification for financial loss of customers.
- maintain stakeholder support by acting fairly and transparently.