Research from Protection Review found 26 per cent of providers’ staff, who spoke to consumers about mental health, had no training on dealing with issues like suicide or depression.
On top of this, 57 per cent of advisers did not have a protocol in place when someone asked about suicide.
And 55 per cent of providers and advisers didn't have a process in place to refer a consumer to a specialist adviser when they were declined.
Consumers often then think, "I can’t get cover, end of", Kevin Carr, chief executive of Protection Review, said.
Speaking at Protection Review, Kathryn Knowles, managing director of Cura, said the industry needed to improve the way it interacted with people with mental health issues or who were suffering from trauma.
She said: "A decline from the insurance industry for someone with mental health is like saying 'we think you're going to kill yourself'... and they're left with a letter.
"We have to think about our responsibility to them as a person."
Ms Undy told the conference: "We need to see a review of underwriting and price for mental health, a shared best practice over exclusions, an accessible and supportive disclosure environment and product innovation to improve inclusion for pre-existing conditions.
"There is a lot already happening. But access to the right products that pay out at the right time is vital for the industry."