Julie Gilbert has no idea what her insurance company knows about her medical history.

Key points: Australians who declare mental health treatments on insurance applications are often forced to grant access to their medical records

Australians who declare mental health treatments on insurance applications are often forced to grant access to their medical records Legal advocates argue "open-ended" access is an "unfair breach of consumers' privacy"

Legal advocates argue "open-ended" access is an "unfair breach of consumers' privacy" They want to limit insurers' access to five years worth of records

When she applied for income protection and life insurance, Ms Gilbert declared she had received counselling for sexual abuse she said she suffered as a child.

For the application to proceed, she had to grant the insurer access to her records. Her GP and specialist were then obligated to hand over the records the insurer asked for, but she had no idea just how much information was passed along.

"As far as I know they've actually seen all of my medical records," she said.

"The scary part about it all is I don't know what else they were able to actually access.

"I don't even know who it went to. I don't know if they still have copies of it, whether that has been destroyed, whether it has been passed on and has it actually been dealt with sensitively."

To make matters worse, insurer MLC applied an exclusion to Ms Gilbert's policy, refusing to cover her for any mental illness in the future.

"I was being a responsible person seeking out help and treatment to make sure that I was a productive person, that I could work; I wasn't going to take sick days off. And I got penalised for it," she said.

"It was just counselling sessions with no medication, but it was good to have someone to talk through some of the things that I was experiencing and ways in which to cope with it."

After allegedly suffering sexual abuse in the mid-1980s, asking for help and getting better, Ms Gilbert is furious an insurance company can discriminate against her.

"Gutted. Angry. Upset. I felt like I was being penalised for something that I didn't do to myself, that was out of my control," she said.

"Every year you get the annual policy and there's that reminder."

Ms Gilbert wants insurance companies to change the way mental health is assessed and excluded from cover. ( ABC News: Emily Clark )

Insurers often gain 'full authority' to access records

Insurance companies often ask applicants to sign over "full authority" to their medical records to assess both claims and cover applications, according to Josh Mennen from the Australian Lawyers Alliance.

Have you ever had treatment or counselling for: Stress, sleeplessness, chronic tiredness

Stress, sleeplessness, chronic tiredness Anxiety including generalised anxiety, reactive or grief anxiety, panic or phobic disorder

Anxiety including generalised anxiety, reactive or grief anxiety, panic or phobic disorder Eating disorder including anorexia nervosa, dysthymia

Eating disorder including anorexia nervosa, dysthymia Manic depressive illness, bipolar disorder

Manic depressive illness, bipolar disorder Alcohol or other substance abuse or addiction

Alcohol or other substance abuse or addiction Post traumatic stress disorder (PTSD)

Post traumatic stress disorder (PTSD) Attention Deficit and/or Hyperactivity Disorder

Attention Deficit and/or Hyperactivity Disorder Schizophrenia or any other psychotic disorder

Schizophrenia or any other psychotic disorder Other __ These are the kinds of conditions you would have to declare you had received treatment for on some insurance applications. Then, the form asks you to provide doctor contact details so insurance companies can request medical records. (Source: MLC Mental Health Questionnaire)

He said that authority granted the insurer access to everything, "potentially going back into an applicant's childhood".

And once that authority has been signed, doctors are obligated to provide the information.

The medical community has expressed concern over the issue and now legal and privacy advocates are calling for change.

Mr Mennen wants insurance companies' "open-ended" access to Australia's medical records to stop.

"People are at the insurer's mercy. If you don't agree, the insurer is not going to proceed with the application," he said.

"We believe that insurers going back decades and trawling through lots of irrelevant information is an unfair breach of consumers' privacy.

"We believe that it is appropriate to limit the period in which an insurer can go back through medical records to five years."

Like Ms Gilbert, Mr Mennen had concerns over the security of the information provided to the insurers.

"Once medical records are uploaded electronically and emailed around within an organisation they could be duplicated and re-duplicated any number of times, so it's very difficult for insurance companies to track and monitor a particular copy of a document," he said.

"This creates significant information management concerns and privacy concerns."

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In a statement, MLC said: "When collecting, managing and storing a customer's personal records, MLC Life Insurance complies with its legal obligations."

Mr Mennen said when there was a claim assessment, the insurer was obliged to disclose what it obtained as evidence to deny a claim, but when it came to a cover application, the onus was not on the company.

"They should write to the applicant and say, 'During your application, we obtained this information'," he said.

Mr Mennen said currently "the law and insurance practices do not strike the right balance".

"If the applicant hasn't actually been to a doctor in a recent period of time, that material is likely to be irrelevant and not related, and so they are likely to be asymptomatic since that time," he said.

"It's important to strike the right balance allowing insurers to understand the application that they're receiving when somebody applies for insurance but also protecting consumers privacy and other rights."

'It feels like they're controlling my health'

Two stories by the ABC on life insurance last year sparked a huge response from viewers and readers.

Many said they had only been offered policies with exclusions because they sought mental health treatment at some time in their lives.

Ms Gilbert believes asking for help with her mental health more than 15 years ago has been critical to her wellbeing. ( ABC News: Emily Clark )

Some ABC readers also said they felt discouraged from seeking out treatment because they did not want to reduce their chance of being covered.

Ms Gilbert said insurance companies had too much access to medical records while assessing risk. ( ABC News: Emily Clark )

Ms Gilbert said she had the same concerns.

"Every time I see it — it comes out every year — it actually feels like I am scared to go and seek help, any treatment, because I'm stressed, because I feel like it's going to be used against me," she said.

"So it actually feels like they're controlling my health and how I actually seek out treatment."

Ms Gilbert wants the way insurers approach mental health assessment changed.

"I want to know, [as] in my case, if anyone has actually been abused as a child and goes and seeks treatment that they are not going to be penalised in their working life for going to seek help," she said.

"In my case, if a five-year timeframe [was] applied, then I wouldn't have an exclusion period."

Industry vows to address mental health exclusions

Mr Mennen is also critical of the life insurance industry's code of practice, which is currently under review.

Mr Mennen said insurers should only be granted access to five years' worth of medical records. ( ABC News: Niall Lenihan )

"With respect to the code of practice, even if the reform that we're calling for is included — that is, that insurers have to have targeted authorities and can only go back five years in terms of seeking medical records — the problem is that the code remains unenforceable and is not subject to ASIC approval.

"We are very much calling for that to be changed in order to give this code teeth and to make sure that it is binding on all life insurers."

The Financial Services Council (FSC) represents the life insurance industry.

Nick Kirwan from the FSC said when the code of practice was reviewed, it would specifically address concerns around mental health exclusions.

"The two things that are specific to mental health are that we've classified people with a mental health condition automatically as vulnerable customers, that gives them additional protections when they make a claim," he said.

Mr Kirwan also said the FSC had "made a commitment" to people applying for insurance.

"We will take into account the individual circumstances of any mental health condition they have had, including its history and severity, as we do for other illnesses," he said.

"If it's a serious diagnosis of a serious mental health condition then of course that may be very relevant forever.

"Whereas if it is something associated with a specific event of something in the past, then perhaps that can be ignored. It all depends on what it is.

Insurance companies ask for GP and specialist information to access records. ( ABC News Emily Clark )

"So for example, if someone went through a grief cycle following the breakdown of a relationship or something like that in the past, there's no reason to believe that might be repeated. That's quite different from something which the underlying cause is still present."

But he said he was not in favour of time limits on medical records.

"It's all about how relevant it is to the insurance risk. And if things are serious then they may be relevant for more than five years and if not, they may be relevant for less than five years."

In a statement, MLC said: