What are my rights when applying for insurance with a mental health condition?

If you feel like you have been discriminated against by an insurer because you have a mental health condition, there are some steps you can take. It is worth understanding that your mental health condition and history might affect how much you must pay for insurance, whether a condition is excluded, or whether you can get insurance.

To make this decision, insurers must have acted reasonably with information that is relevant and reliable. We explain what your rights are and what guidelines insurance companies must follow.

Insurance providers should not use a ‘catch-all’ policy based on assumptions, stereotypes or generalisations to assess any group of people, including those with a mental health condition.

Insurance companies should do a risk assessment as part of the underwriting process when you make an application. They do this to calculate how likely you are to make a claim and balance this to ensure there is enough money left to pay other claims.

To help inform their decision, they should:

• Ask you questions about your medical history.
• Ask you questions about your current situation.
• Look at relevant, reliable data.

Insurers have teams of underwriters who can let you know the reasons why decisions have been made. Under the ABI’s Mental Health and Insurance Standards, you can ask that an insurer explains what evidence was used to inform the underwriting approach. This evidence could be a combination of an insurer’s claims data or the medical evidence used to inform the underwriting decision.

The Data Protection Act 2018 gives you the right to request a copy of the personal information held about you in a form that you understand. You can appeal the decision.

What happens if I am not honest about my mental health?

Not answering questions honestly is called misrepresentation. If you don’t answer questions honestly about your mental health, and your insurance company finds out in the future, you could face several consequences such as:

• Your insurance provider cancels your policy.
• Your policy is void - this means that if you make a claim, your insurer won’t pay you, even if it’s not related to mental health.
• You could be charged a lump sum to make up the difference in policy premiums if the insurer knew at the time about your mental health condition.
• You will find it more challenging to get insurance in the future.

What guidelines must insurers follow?

Insurance companies must comply with both the Financial Conduct Authority (FCA) and the Equality Act 2010.

There is also statutory guidance in the Code of Practice on Services, Public Functions and Associations (EHRC Services Code). The EHRC Services Code should be read alongside the Supplement to the Statutory Code of Practice on Services, Public Functions and Associations which identifies developments in the law since the Code was approved and is a statement of the law as at 31 March 2014. The Supplement has no statutory force.

Financial Conduct Authority

Insurance is regulated by the Financial Conduct Authority (FCA). Their rules say that an insurance company should:

• Try to make sure that you only buy a policy that you can claim under.
• Give you information about how to complain.
• Deal with claims quickly and fairly.

Equality Act 2010

The Equality Act 2010 protects people with ‘protected characteristics’ - including disability - from unfair treatment. Unfair treatment is known as ‘discrimination’.

If you have a mental health condition, you might have a disability under the Equality Act if it:

• Has a substantial effect on your day-to-day life; and
• Has lasted 12 months or is likely to last 12 months.

There may be cases where an insurance provider could lawfully treat you differently based on your mental health condition - by charging higher premiums, refusing your insurance cover or exclusions if:

• The insurance provider acts on information that is relevant to the risk;
• From a reliable source; and
• What they are doing is reasonable.

The Equality Act 2010 can also protect you from discrimination if you have had a mental health condition in the past, which you no longer have.

You can get free expert advice on the Equality Act from the Equality Advisory and Support Service.

Relevant and reliable data

Insurers base their decision to offer cover, and at what premium, by assessing the risk of the event happening. Relevant information helps them assess this risk.

For information to be relevant, there must be a link between your mental health condition and the insurance you are applying for.

When assessing risk Insurance companies look at the likelihood that something might happen, for example, if you claim on your policy due to your mental health condition. With long-term policies, insurers will assess the likelihood of that happening in the future. This can be very different to the risk of that happening now, such as if your doctor says you are stable because the insurer might be looking at covering you for 25 years.

If the information your insurance provider has used is not relevant, their decision to refuse cover or to offer it on certain terms may be judged as unlawful discrimination.

The data that insurers use to base their decision for your insurance application must be from a source on which it is reasonable to rely. It might not be reasonable to rely on information if:

• It is inaccurate.
• It is too old.
• It is from an unreliable source.

If the data used by the insurer were not reliable, it may be judged to be unlawful.

Reasonable decisions

In addition to making decisions on ‘relevant’ and ‘reliable’ information, insurers must make ‘reasonable’ decisions. There is no legal definition for ‘reasonable’, but ‘unreasonable’ behaviour could include:

• Charging a premium which is unbalanced to the risk your mental health condition poses.
• Not explaining why they have made their decision.
• Generalising all people with a mental health condition, rather than considering your specific circumstances.