Life insurers resume return to work pitch

Mike Taylor

Managing Editor and Publisher

6 May 2026

Australia’s major life insurers have again raised the issue of being allowed fund some medical expenses with a new report released by the Council of Australia Life Insurers (CALI) pointing to the degree which publicly-funded workers compensation is being placed under pressure.

The report, Cross Sector Project Update, developed by CALI and Superfriend. argues that demand for income support is “growing faster than the system’s capacity to supply” and pointing to the rapid increase in mental health claims as a major contributor

The report suggests that mental health pressures are “exposing a system where Australians are waiting longer, falling through gaps, or giving up altogether”.

“Australians who fall ill or are injured still face long waits for treatment, disconnected systems and missed chances to recover and return to work, with mental health claims putting the system under growing strain,” it said.

“Despite the scale and breadth of Australia’s income support systems, there remain significant gaps and challenges that affect people’s experiences and outcomes.”

The report said one of the major gaps across Australia’s income support systems is the limited access to funded medical treatment and that, at present, medical care is only covered through Workers’ Compensation, Motor Vehicle Cover of Department of Veterans Affairs systems.

It noted that life insurance fills income gaps but does not provide treatment.

“Life Insurance is legally prevented from covering some medical expenses (but does provide for other services to support return-to-work), leaving many individuals reliant on either the public health system or self-funding their healthcare.

“This creates significant inequities in access to treatment. For example, in mental health, demand far outstrips supply: long waitlists for psychologists and psychiatrists mean that conditions can worsen before treatment is received,” the report said.

“While mental health care plans through GPs provide an avenue for access, effectiveness is constrained by availability of providers and  the limited number of subsidised sessions.”

The report said rising mental health claims are straining the sustainability of the safety net.

“Some Workers’ Compensation jurisdictions have raised thresholds for mental health claim eligibility to control costs and limit premium increases for employers. While intended to protect scheme viability, this approach risks removing one of the few systems that provides early and funded medical treatment for mental health conditions.

“If entry thresholds are perceived to be high, people may face drawn-out, challenging claims processes, leaving them to self-fund treatment while unable to work. Complex and drawn-out claims can lead people to give up during the process, preventing the system achieving its purpose of supporting people financially when they need it most,” it said.

The report said that, ultimately, return to work needed to be the goal and life insurance is well placed to play a stronger role