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Landmark travel insurance victory set to push up costs

December 21, 2015 Headline News, Insurance No Comments Email Email

egtmedia59Insurance giant QBE has been ordered to reimburse a Melbourne woman the full cost of a New York trip she was forced to cancel after developing depression – and to pay her an additional, far greater, sum for hurt and humiliation.

The outcome of Ella Ingram’s legal battle against QBE has set an important precedent for travel insurance. QBE had contended that the outcome could potentially push up the cost of travel insurance policies. It has since reaffirmed that a “significant increase” is now likely to happen.

Laywers for QBE had argued before the Victorian Civil and Administrative Tribunal (VCAT) that the company was within its rights to refuse coverage for mental illness in its travel insurance.Ella Ingram

The case arose after Ingram, 21, had been due to go on a school trip to New York in 2012, when she was 17. After she booked the trip, she developed severe depression and was advised by doctors not to go. When she followed their advice and cancelled, QBE refused to pay out. See: Woman sues travel insurer over mental payout refusal

QBE travel insurance does not cover trip cancellation due to mental illness, even if the mental illness is not a pre-existing condition. That is not unusual. Consumer advocacy body CHOICE reviewed 35 travel insurance policies and found only two insurers, Bupa and CGU, offered cover for mental illness, and then only in certain circumstances.

QBE had argued that excluding mental illness from travel insurance was standard industry practice. It said the impact of the finding could have ramifications for the cost of travel insurance polices across the board.

In the first ruling of its kind, VCAT member Anne Dea found Ingram’s depression was a disability and by refusing to insure her, QBE “engaged in direct discrimination”.

Ingram described the win as “a bit surreal” and a “huge relief”. She told ABC News she hopes her victory would prevent others being discriminated against for having a mental illness.

“I would like for insurance companies to treat mental illness the same as any other physical illness and for them to not just base their reasons on stereotyping,” Ingram said.

“We’re in the 21st century and it’s great that people like myself are speaking out about mental illnesses and it’s time that they get up with the program,” she told ABC News.

VCAT found QBE breached the Equal Opportunities Act by issuing Ingram a policy that included the mental illness exclusion and when it refused indemnity based on that clause.

The company has been ordered to pay Ingram AUD 4292 to cover lost travel costs and an additional AUD 15,000 in compensation for hurt and humiliation.

In a statement, QBE said it understood concerns about mental health but the company would have to increase costs to cover it.

“We understand the concerns expressed over mental health illness and empathise with all Australians who suffer from mental health illnesses,” QBE said.

“The general insurance industry relies on insurers being able to price products appropriately to reflect the risks and, as such, the law in each jurisdiction recognises insurers are entitled to discriminate on this basis.

“With a significant number of Australians suffering from mental health illnesses to some degree in any given year, to provide travel insurance cover for mental health illness would significantly increase the cost of travel insurance premiums for the whole community.”

Insurance Council of Australia chief executive Rob Whelan told ABC News the council would take time to “carefully analyse” VCAT’s decision.

Written by Peter Needham

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