More Long Covid insurance claims declined on mental health grounds, lawyer says 

Media Release: Long Covid Support Aotearoa, 22 October

Long Covid patients who are too sick to work should have fair access to financial protection. Recent reports of insurance claims being declined on mental health grounds raise questions about how insurers assess this disabling physical illness. And an insurance lawyer says this kind of insurance denial may be on the rise.

Long Covid Support Aotearoa is calling for an investigation into the use of mental health exclusions in Long Covid insurance claims. 

This week a media article highlighted the case of Christchurch software engineer and Long Covid patient Tales Azevedo Alves, whose income protection claim with Partners Life was declined in August, leaving him without an income and unable to work.

Azevedo Alves describes how post-exertional malaise has left him struggling with basic daily activities. This illustrates the profound impact Long Covid can have on everyday functioning, not just a person’s ability to return to work or exercise.

His insurer’s decision relied on a mental health exclusion that included “fatigue-related disorders”, following an earlier ADHD diagnosis. Azevedo Alves disputes the decision, arguing that Long Covid is a physical post-viral illness rather than a mental health disorder.

A similar case involved Nicola Coombe, whose “total and permanent disability” claim was declined under an exclusion applied because of her earlier experience with anxiety and depression.

“People living with disabling illness are already dealing with so much. The last thing they need is to have to fight for the income protection they’ve paid for – and expected would be there for them,” says Larisa Hockey, Chair of Long Covid Support Aotearoa.

“A diagnosis from someone’s past shouldn’t be used to dismiss what they’re going through now. Having had anxiety, depression or ADHD doesn’t mean they have a mental health disorder today – or that it caused their disability,” Hockey said.

Insurance lawyer Tim Gunn, based in Matakana and specialising in income protection insurance, says he is seeing an increase in cases where mental health exclusions are being used to decline income protection claims by people unable to work because of Long Covid.

“I understand there are numerous people in the same or similar situation and that it may not be limited to one insurer,” says Gunn. 

“Despite Long Covid not being a mental health condition, the insurance companies say they are caught within the wording of those mental health exclusions,” he said.

Gunn is pursuing a group action format to legally test the fairness and application of the mental health exclusion clause to Long Covid “disablement” claims.  

“This is because the costs of litigation on a per-individual basis are high. So, the hope is that by grouping cases together we can get a fair outcome for everyone,” Gunn said.

The issue is not limited to Long Covid. For decades, the ME/CFS community has raised concerns about insurance barriers, including the use of mental health exclusions for people with this illness.

ANZMES Charitable Trust, New Zealand’s national advisory body for ME and associated conditions, including Long Covid, shares these concerns.

“Growing international evidence demonstrates that Long Covid and Myalgic Encephalomyelitis (ME) involve biological dysfunction affecting multiple body systems, including immune, neurological, autonomic and metabolic processes,” says Fiona Charlton, ANZMES President.

“Insurance assessments must be based on current scientific evidence and individual clinical circumstances, not outdated assumptions,” she said.

The cases highlight a wider problem: even if a declined insurance claim is eventually upheld, people may face months or years of financial hardship while challenging the decision.

Insurance is only part of the picture. People with Long Covid who cannot work may face substantial financial losses and barriers to accessing support while seriously unwell. Many without income protection insurance must rely on Work and Income or a partner for financial support, pointing to the need for an adequate public safety net.

Long Covid Support Aotearoa is calling for:

1. An investigation into insurance practices: We invite the Financial Markets Authority (FMA) to consider whether the reported cases warrant a broader review of how insurers word and apply mental health exclusions, including when assessing claims for Long Covid and other physical illnesses.
2. Fair access to income support: Political parties should commit to ensuring people who cannot work because of disabling illness can access appropriate disability-related financial support, including those with declined claims and those without insurance.
3. Evidence-based assessments and accountability: Insurers and government agencies should assess people’s functional capacity and relevant medical evidence, rather than relying on assumptions about a diagnosis.

We encourage affected people to take their concerns to the FMA, which oversees insurers’ conduct and fair-treatment obligations, as suggested in recent media.

Lawyer Tim Gunn would like to hear from people interested in joining a potential group action on income protection insurance decisions based on mental health exclusions. He is also interested in hearing about similar experiences involving other insurers and related claims.

END

Note: The FMA and the Human Rights Commission (HRC) have both indicated that they respond to complaints like these. The HRC process is more formal and lengthy. However, the FMA has no formal process and is asking affected individuals to bring similar problems to their attention.

For more information about ME, CFS, Long Covid and related infection-associated conditions, insurers are welcome to contact ANZMES Charitable Trust or Long Covid Support Aotearoa