Australia’s escalating mental health crisis is fundamentally reshaping the insurance landscape, with the construction sector emerging as a focal point for rising claims and new risk management challenges. As life insurers announce the development of an action plan for mental health, the crisis continues to test the resilience of government, business, and the wider insurance sector.
Mental health conditions are now a significant concern across Australian workplaces, with the construction industry particularly affected. Recent reports suggest that 20% of construction workers have experienced a mental health condition - a figure that underscores the scale of the issue and its implications for both employers and insurers. This is especially concerning in an industry already known for its high-risk environment and complex workforce arrangements.
The mental health crisis has become a rapidly growing driver of claims costs, especially in workers’ compensation and liability claims. In the construction sector, “worker to worker” claims - where one worker’s actions impact another - are increasingly dominated by mental health issues. According to industry reports by Marsh and Aon, mental health claims now account for between 30% and 50% of the total value of liability claims in construction portfolios. While physical injury claims have remained relatively stable, mental stress-related claims have surged by nearly 100% over the past decade.
This trend is significant for insurers and employers alike. A “hardening market” - where insurance premiums rise and coverage becomes more restrictive - means that controlling claims costs is more important than ever. The surge in mental health claims is putting upward pressure on premiums and making risk management more complex.
For insurance brokers, these changes mean that traditional approaches to risk assessment and claims management are no longer sufficient. Proactive engagement with clients is now essential. Brokers must help clients implement robust mental health strategies, improve documentation, and review return-to-work processes. These steps are critical for controlling premiums, reducing claims frequency, and demonstrating value to both insurers and insureds.
As Peter Jeeves (pictured, left), head of construction for Lockton, observes, psychological workers' compensation claims are on the rise, but they are notoriously difficult to manage and mitigate. He cautions that the full impact of the current surge in mental health claims may not be fully understood until the final claims costs are realized in the coming years.
Managing these claims is further complicated by the nature of construction projects, which often involve multiple firms and labour hire businesses. Austin Rosier (pictured, right), senior risk adviser with Omnisure, points out that claims investigations can become highly complex when a mental health incident involves employees from different businesses or labour hire firms on the same site. He also notes that the increasingly litigious environment in workers’ compensation is adding to the overall cost of mental health claims. “You might have a workplace mental health claim relating to a serious worksite injury where you've perhaps seen an employee of another business, or a labour hire business, or the like, on site get injured or even killed,” he said.
For large construction firms, Rosier recommends engaging professionals to manage these challenges, as doing so typically leads to better outcomes for premiums, return-to-work processes, and day-to-day risk management.
Some leading construction firms are already taking action by introducing mental health training for supervisors, establishing peer support programs, and partnering with mental health professionals. For example, a major Australian contractor recently implemented a peer support network and saw a measurable reduction in both the frequency and cost of mental health claims over a two-year period. These practical steps not only support workers but also help control insurance costs and improve overall project outcomes.
As mental health claims continue to rise and reshape the risk landscape, the insurance industry - alongside brokers and employers - must adapt rapidly. The development of industry-wide action plans is a positive step, but the complexity and scale of the crisis demand ongoing innovation and collaboration. Key recommendations include:
Only by embracing new strategies and expert guidance can the sector hope to manage costs, support workers, and build resilience for the future.
Are you a broker in the construction sector? Please tell us about the mental health impacts you are seeing on premiums and claims costs?
