Hundreds of thousands of Australians are still being sold travel insurance policies that will not cover them for mental illness, years after a landmark case against QBE was meant to turn things around.

Key points: Hundreds of people were denied mental health-related claims by three companies

Hundreds of people were denied mental health-related claims by three companies Ella Ingram still struggles to get affordable travel insurance, despite winning her case against QBE

Ella Ingram still struggles to get affordable travel insurance, despite winning her case against QBE Almost half of all Australians will experience a mental health condition at some point in their lives

Four years ago, Ella Ingram was awarded compensation because her insurer, QBE, decided not to cover her for a bout of depression that forced her to cancel an overseas school trip.

She took them on and won, and the case got the attention of the Victorian Equal Opportunity and Human Rights Commission (VEOHRC), which launched an investigation into travel insurance companies.

"It should've been and it could've been a watershed moment for other insurers to look at their policies to try to determine whether they did have the basis to discriminate against people on mental health conditions," commissioner Kristen Hilton said.

"But it wasn't."

The commission investigated three travel insurance companies — Allianz, Suncorp and World Nomads (now nib Travel) — and the data the companies relied on to support blanket exclusions for mental health conditions.

Mental health exclusions mean the policy holder cannot make a claim if their trip is affected by mental illness of any kind, pre-existing or new.

The exclusion treats everything from mild anxiety to a psychotic episode exactly the same.

The investigation found in a period of eight months, between July 2017 and April 2018, the three companies sold 365,000 policies containing exclusions, and denied hundreds of people's claims on the basis on mental illness.

"In terms of unlawful discrimination, we found that it was widespread and far-reaching," Ms Hilton said.

"We have recommended that insurers contact all of the claimants that might have been affected by these discriminatory policies."

The VEOHR's commissioner Kristen Hilton does not have enforcement powers to crack down on insurers doing the wrong thing. ( ABC News: Patrick Stone )

Such blanket exclusions are only lawful if the insurers can justify them with statistical data, which shows the group is too high-risk.

"In all the insurance that we looked at, we found that the data was either inadequate to justify the policy, it was out of date, or in some cases the data simply didn't exist," Ms Hilton said.

Cheaper to fly home

After Ms Ingram won her case against QBE, she booked a flight to Europe and started to look for travel insurance that would cover her.

But, despite some insurers removing blanket exclusions, she still could not find an affordable option.

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"We came up with this plan that if I was overseas and I started to slip and become unwell again mentally, I could make an assessment right then and there and think I should probably go home now," she said.

"The cost of the flight home was going to be less than the premium to pay for an existing mental health condition."

She said she found the lack of progress that pushed the commission to look into the issue disappointing.

"I don't want to sound pessimistic, but I don't think there has been too much change and … that's been disappointing," Ms Ingram said.

"In my position where I've gone through this court case, I've gone through the whole debacle of it all, it's disconcerting to see that it's still happening, it's still an issue and there's still policies out there that are discriminating against people."

But there is some room for hope.

The three companies that participated in the investigation, which represent more than a third of industry, all agreed to change their policies and scrap blanket exclusions.

"The insurers that we worked with, were good to work with … there was a recognition that perhaps the industry had not moved in the way that community understanding and medical understanding of mental health conditions had," Ms Hilton said.

Insurers 'stuck in the stone age'

But consumers essentially rely on the companies' goodwill because the commissioner is powerless to hold them to their legal obligations not to discriminate.

"That's probably one of the issues; as a regulator in this space, we would like to have stronger powers, we would like to take more robust action," Ms Hilton said.

"We've certainly submitted the report to the insurance regulators in the insurance industry and pointed out what the deficiencies in the current system are and we've encouraged better regulations."

But she is taking heart that insurers are recognising they have fallen behind community standards when it comes to mental health.

And the commission is not completely taking the companies at their word that the eight recommendations resulting from the investigation will be taken up, and things will improve for consumers.

"All insurers that were party to the investigation have agreed to change their policies, or have already changed their policies in relation to blanket exclusions," Ms Hilton said.

"A number of them have also agreed to implement all of our recommendations,".

"We've also said that we'll go back in six months' time and look at what development and progress have been made and report on that."

Ella Ingram says many policies still discriminate against people with mental health conditions. ( Supplied: Ella Ingram )

For Ms Ingram, that change is long overdue.

"People in Australia are going to get diagnosed with mental health conditions. I just feel like the general population of Australia is starting to move forward in talking about mental health conditions and I feel like insurers are stuck in the stone age," she said.

The Insurance Council of Australia (ICA) said it had been working alongside its members to improve mental health-related coverage and outcomes for customers.

"The ICA and members cooperated openly with VEOHRC during its inquiry, but have not seen the final report," the ICA's Campbell Fuller said.

"Travel insurers responsible for most of the market had either removed exemptions or were intending to do so before this inquiry was instigated in 2017.

"This trend has continued and soon insurers with more than 80 per cent share of the travel insurance market will have removed blanket exclusions for mental health conditions, with cover also widely available for first-instance episodes of mental health conditions.

"Many insurers cover pre-existing mental health conditions on an individually underwritten basis similar to coverage available for pre-existing medical conditions."

The ABC contacted Allianz, Suncorp and nib Travel for comment.

In a statement, nib Travel said it was working with its underwriter to adopt the changes, and travellers with mental health conditions, new and pre-existing "may be covered for policy benefits" in the following months.

Suncorp said it had already removed mental health exclusions from its policies.

"We accept that, at the time, our policies did not comply with the Victorian legislation and community expectations," Suncorp said in a statement.

Allianz said it believed "the terms and conditions of the relevant policies were reasonable", but it had widened its coverage to support people with mental illness in late 2017.

QBE, which had removed mental health exclusions by the time of the investigation, was asked to take part but declined and sold out of the travel insurance business in the second half of last year.