The next day, the car returned. Wilcox, who lived with her husband, Paul, a police officer, did not recognise the car. But when she looked more closely, she noticed the driver, sitting in the passenger seat, pointing a camera at her.

"That's when I realised we were being watched," she said.

A dark-haired, plain-speaking woman, Wilcox, 42, is a former nurse who worked for six years at Harden Hospital, near Cootamundra. In July 2009, she suffered a back injury while trying to lift an obese patient, tearing cartilage and muscle, fracturing two vertebrae and damaging a disc. (The injury would eventually require a spinal fusion, which she had in 2014.)

Soon after the accident, Wilcox's employer lodged a Total and Permanent Disability claim with Workers Comp, which is backed by insurer Employers Mutual Limited, or EML. EML agreed to pay Wilcox income protection, but not the TPD.

"They have refused to hand over any money," said Wilcox, who has spent five years in a bitter dispute with the insurer.

"I've seen about 18 doctors. There have been endless medical reports, procedures, forms, appointments and follow-ups. I also get constant harassing phone calls from claims managers demanding this and that. I tell them to email me, so that at least I have a paper trail, but they keep calling."

Wilcox has been videotaped, photographed and followed to appointments. She has even had light planes fly over her home.

"One of them was so close it clipped the gum tree 50 metres from the house. When it went past I saw a guy with a camera in the passenger seat."

In a response to the Herald, EML said its "focus always remains on helping people with their recovery, providing access to medical support and assistance with their claims".

But when Wilcox had spinal surgery in 2014, EML refused to pay. Wilcox claims EML also refused to pay for procedures such as MRIs that it had promised to cover, leaving her hundreds of dollars out of pocket.

In 2014, with her husband in the final stages of terminal cancer, Wilcox applied for domestic assistance, "just for someone to do the mowing and vacuuming", but EML refused that too.

Instead, it sent her to Sydney to see an orthopaedic specialist and a psychiatrist, who told her that the pain was "all in her head".

"If EML had just accepted liability when presented with the facts, they would have saved a lot of money instead of wasting it on cash-for-comment doctors and surveillance and chasing around trying to find a made-up explanation."

Wilcox is not alone. In the past two years the number of people who say they have been harassed and bullied by their life insurance provider has risen steeply.

"It's increasingly common," said Andrew Weinmann, a superannuation and insurance lawyer at Slater and Gordon.

"Life and disability insurers are fighting harder now, and subjecting claimants to more intrusive and humiliating demands."

Common tactics include putting claimants through endless rounds of medical assessments and procedures, covert surveillance, and repeated requests for documents such as doctors' statements, employment histories and financial activity. "Then there's the 'activities diary'," said Weinmann, "where claimants have to account for everything they do through the course of every day, all their movements, when they were asleep and when they were awake. Sometimes this is for a fixed period, but often it's indefinite. Plenty of people find it too stressful, and give up on perfectly good claims." 

Greens MP David Shoebridge works closely with psychologically injured police officers whose claims assessments have gone on for more than three or four years. "There are good claims officers," Shoebridge said. "But at the same time, life insurance companies have a financial incentive to put in place impossible claims processes. They think that if they string people out they will eventually walk away. And every single claimant who walks away is money in the insurer's pocket, often hundreds of thousands of dollars."

Experts say the problem goes back to 2005, when the Howard government first made it possible for employees to choose their superannuation fund. Large super funds suddenly found themselves competing with one another by, among other things, improving the life insurance they offered to members. This in turn started a bidding war among insurers, which, in order to grow market share, began offering greater levels of cover and more generous terms, as well as dropping premiums, sometimes by up to 20 per cent.

"Now this strategy has come back to bite them on the bum," said John Berrill, an insurance lawyer and consumer representative on the Superannuation Complaints Tribunal Advisory Council. "Five years ago, the people who took up those policies started to get sick and make claims, especially mental health claims, and the life insurers took a big hit to their bottom line."

According to Berrill, insurers have responded by tightening up terms, raising premiums and "screwing people over". Recent research from QUT's School of Psychology suggests that dealing with insurance companies can now be more stressful for claimants than their original injury.

"These people brought me to the brink," says 37-year-old single mother, Susan Ames*. Ames had already suffered considerably, having been forced as a young woman to flee a violent family, move interstate and change her name. She was insured with TAL (formerly known as Tower Australia) as part of her super. But rather than help her, she said TAL made her life "unbearable" by stringing out her IP and TPD claims for 15 months.

Despite being diagnosed with PTSD and a major depressive disorder by both her and TAL's doctors, Ames was subject to covert surveillance, more than a year of activity diaries and forensic examination of her medical and financial records. TAL recommended she undergo alternative treatments, and bombarded her with daily phone calls, even after her doctor warned the insurer that such contact was "aggravating [her] condition". TAL eventually paid the claim, but not before it had breached Ames' privacy by emailing 32 pieces of personal information, including her past and current names, past and current addresses, her date of birth, and financial and medical details, to the wrong person. When Ames alerted TAL to the privacy breach, the company told her it was "an isolated incident".

TAL won't comment on individual cases, but said in a statement that it had paid out $37.9 million last year in claims relating to mental illness, and that "supporting our customers through the claims process is critical to the service we provide."

The complexity and contentious nature of life and disability claims has been a boon for compensation lawyers, who have been accused by insurers and superannuation funds of encouraging claimants to go to court. The Association of Superannuation Funds of Australia has even launched an education campaign telling fund members that they don't need to engage a lawyer to make a claim.

That doesn't surprise the lawyers. "Insurers prefer claimants to be self-represented," Andrew Weinmann said. "On one side, you have the insurance company with insurance professionals working on it, and on the other side you have an individual claimant who is unlikely to have any expertise in insurance. This is a clear advantage for insurers."

Weinmann says that, in order to "perpetuate this imbalance of power", insurers try to maintain direct access to claimants. "For example, they make claimants undergo face-to-face interviews with investigators rather than submitting claim forms. For people with mental illness, this can be distressing and confronting. It also means that they lose control over the way they run their case, because the information is recorded by the investigator and then presented to the insurers."

As Shoebridge said: "Insurance is meant to be there in moments of distress. Instead, it is adding to the distress." He now wants the life insurance industry and consumer groups to work together on a binding code of practice to govern claims processing.

"As it stands, the insurers don't have to justify their actions. There is no threshold of reasonableness or legislated requirement of decency in regard to how they go about their claims assessment. And that's a failing that parliaments have to remedy."

* Not her real name