LEIGH SALES, PRESENTER: Australia's insurance giants have a shocking record when it comes to the treatment of people with mental illness.

The industry has repeatedly promised to clean up its act but still, every year, thousands of mentally ill Australians are forced through gruelling claims procedures.

Tonight, a former top executive at the life insurance giant TAL is blowing the whistle on industry practices, after he himself had to make a mental health claim.

Pat McGrath has been following his journey.

(Footage of Patrick O'Connor walking down Sydney CBD street)

PATRICK O'CONNOR, FORMER TAL EXECUTIVE: This is where I built my dream and this is where my dream fell over. If this matter that I have with TAL goes to court and if I have to come back here to fight them: God help them.

PAT MCGRATH, REPORTER: Patrick O'Connor doesn't look like a man afraid of a fight, but he has been dreading coming to Sydney to prepare for his biggest battle yet.

His opponent is his former employer, the life insurance giant, T.A.L. - or 'Tal'.

(Excerpt from television advertisement)

ANNOUNCER (advertisement): TAL: ensuring this Australian life.

(Excerpt ends)

PATRICK O'CONNOR: It is not about money. I was one of their own. If they treat me this way, what's to stop them treating other people this way? If the system for how mental health is treated in the insurance industry is reflected by my experience, then that is disgusting and it has to be changed.

PAT MCGRATH: From humble beginnings as an insurance broker, Patrick O'Connor climbed the ladder to become TAL's head of sales.

But six years ago, while his career was taking off, his mental health went into a freefall.

PATRICK O'CONNOR: I was on the cusp of achieving pretty much all of the goals that I'd set for myself. And instead of being happy or euphoric about that, I was overcome with these crippling waves of anxiety: these panic attacks that just left me literally prone on the floor.

PAT MCGRATH: Patrick got medical help but he realised he could no longer handle the pressure of work.

PATRICK O'CONNOR: After talking to my doctor, we made the decision to talk to my manager and we made, I guess, a difficult decision that I had to leave. I had to leave the business.

PAT MCGRATH: TAL offered Patrick a redundancy. He took it but his mental illness, by this time diagnosed as treatment-resistant anxiety and depression, worsened.

PATRICK O'CONNOR: It got to the point in June of 2015 where I made a decision that I wasn't able to support myself and I lodged an income protection claim with TAL.

PAT MCGRATH: Patrick also claimed on his two disability insurance policies with TAL. It paid out one in 2016 but last year it declined the second, saying it only covered illnesses that started when he was working. TAL pointed to the fine print in his policy.

JOSH MENNEN, MAURICE BLACKBURN LAWYERS: Under this particular policy, insurance ceases on the date that employment ends; and TAL is arguing that he didn't become sick until after his employment ended - even though it was fully aware that he had been struggling with mental health problems for months in the lead-up to his departure.

PAT MCGRATH: The big insurers are grappling with a massive surge in mental health-related claims. Data from one insurer shows the proportion of mental health-related claims jumped from about 10 per cent to

almost 20 per cent of all claims in just five years: a huge toll on profits.

NICK KIRWAN, FINANCIAL SERVICES COUNCIL: When people make a total permanent disability claim, it's actually saying that someone will never, ever work again. And that should be a decision that's only made as a last resort.

PAT MCGRATH: The industry insists that there's no agenda of delaying payouts for people with mental illness.

NICK KIRWAN: Insurance companies want to pay valid claims as quickly as they can; as easily as they can. Figures from APRA show that 90 per cent of all claims are paid in the first instance.

PAT MCGRATH: After lodging an appeal to TAL's denial, Patrick O'Connor returned to his home on the New South Wales south coast. He has spent time reflecting on how TAL treated people with mental illness when he was among the company's top ranks - and he is not proud.

PATRICK O'CONNOR: I'm pretty disgusted, to be honest, that that was what my life consisted of.

PAT MCGRATH: Now Patrick is publicly calling out TAL for how it treats people with mental illness. He believes front-line staff at the company worked hard to look after customers' wellbeing; but, in executive meetings he attended, the company's focus was on minimising payouts for customers - or, in industry speak, getting them "off-claim".

PATRICK O'CONNOR: One of the key parts of an executive meeting that you would have on a weekly basis was profitability. And without a doubt the biggest variable that you have is claims and the biggest variable within claims is the mental health conditions.

It was about how many we had got back to work or how many that we'd got off-claim. We weren't celebrating successes about improving people's lives: we were celebrating financial successes.

GEORGIE HARMAN, CEO, BEYONDBLUE: I think the insurance industry is basically out of step with the 21st century expectations of real people who live in the real world.

PAT MCGRATH: Beyond Blue has just finished a survey of people with mental illness who have tried to claim on their income protection or total permanent disability insurance. They've shared the results exclusively with 7.30.

GEORGIE HARMAN: Of those 1,800 people that we spoke to, about 50 per cent reported that their mental health suffered as a result of the claims process. People are more likely to be subjected to quite intrusive examinations.

These processes are having a very detrimental effect for everyday people who have in good faith bought products, paid their premiums, become unwell and then expect to be treated just like anyone else.

NICK KIRWAN: The industry is working very hard to try to understand this better. And one of the things that we have done is introduce a standard, such that every single person in an insurance company, that deals with customers face-to-face, has mental health training now.

PAT MCGRATH: In a statement, TAL said it doesn't comment on individual cases. But it rejected Patrick O'Connor's criticism about how it handles mental illness, saying it judges every case on its merits.

Eight months after Patrick lodged his claim and five months after he was rejected, three months after he lodged an appeal: last week TAL told him it was going to pay up.

That was two days after 7.30 contacted the company about this story. But TAL maintains the timing was simply coincidental.

JOSH MENNEN: So today is a good day.

PAT MCGRATH: Patrick's own fight is now over, but he wants the world to know how the industry treats people with mental illness.

PATRICK O'CONNOR: You know, in the space of 48 hours we now have a letter admitting full liability, albeit with, you know, thanking us for our patience.

Well, I don't have any patience. What I have is money. And if I didn't have that money, I wouldn't have been able to last eight months.

LEIGH SALES: Pat McGrath reporting.