Writing life insurance for those who suffer mental health issues has long been a vexed area, but insurers and the health sector are working to put minds at ease, reports JEREMY CHUNN.
Life insurance is something almost all Australians would happily admit to knowing very little about. For the 3 per cent who suffer enduring mental illness or the 15 per cent who face episodes of common mental disorders, there is good reason for such nonchalance. Other than the basic life cover bundled in with employer superannuation, insurers have not been in a great rush to write life policies for individuals who are afflicted. To put it bluntly, sufferers of chronic depression, bipolar disorder or schizophrenia would be way off the acceptable risk spectrum for many insurers.
But attitudes have changed. As the taboo of suicide is given airing and as “the truth about mental health in Australia” is being addressed by Mental Health commissioner and former Australian Competition and Consumer Commission chair, Allan Fels, the grey spectre of disability has become a more solid form that cannot be ignored. Liberal Member of Parliament Andrew Robb’s book about suffering depression while involved with national policy is a vivid example of the futility of supressing a gruelling affliction. Mental health is on the national agenda and insurers are playing a part in making life more bearable for those who sometimes exist beneath roiling dark clouds.
It started in 2003 with a memorandum of understanding between the mental health sector, the Financial Services Council and the Financial Planning Association, to set out a collaborative approach to improving outcomes for sufferers. This was replaced by the Insurance Reform Advisory Group (IRAG), which includes Minister for Financial Services and Superannuation Bill Shorten, Mental Health Minister Mark Butler, depression-awareness body Beyondblue, the Insurance Council of Australia, Financial Planners Association, Institute of Actuaries and the Financial Services Council.
The IRAG first met in September 2011 and is seeking ways that government, insurers and the mental health sector can provide better insurance options to those who suffer from mental illness. One of the group’s objectives is to standardise mental health conditions for the insurance industry, which may indicate to what degree the issue had been swept under the carpet.
“We certainly don’t intend for IRAG to become an endless debating shop or write up some unworkable wish list, but it can be a useful and constructive way to bring industry and consumers together to help government drive meaningful reform,” Shorten said at the time. Butler declared the group would target “discrimination and stigma” as barriers that apply for insurance in the first instance or impede people from fully disclosing their illness, leading to inadequate cover.
Exclusions: medical, but not mental
People suffering from mental health conditions are not excluded from cover in group insurance contracts as long as they meet the eligibility test when they first start work with an employer, says Comminsure general manager of wholesale life, Claire Roberts. Exclusions can be put in place for a medical condition based on a person’s medical history, but mental health conditions are treated no differently to any other medical condition by the insurer, she says. The negative impact of illness can be minimised if early diagnosis leads to more effective treatment, and the government has acknowledged the importance of early intervention and optimal treatment via its introduction of the Mental Health Care Plan.
Individual health and wellbeing
Roberts says mental illness claims account for about 16 per cent of incidence and more than 28 per cent of claims cost across the Australian life insurance industry. Income protection and salary continuance payments associated with mental health disorders are expected to rise, she says, with the World Health Organisation forecasting an increase in disorders. Insurers will be judged on how they deal with this problem.
“Insurers can assist by understanding the individual’s specific circumstances and by working collaboratively with the individual and their treating professionals. The insurer can also fund rehabilitation assistance and return-to-work programs,” Roberts says, adding that research from the Australian Faculty of Occupational and Environmental Medicine shows work is an important part of an individual’s health and wellbeing. “It’s also about supporting community awareness around mental health,” she says.
Underwriters of life insurance know each case is different. During initial assessment they look at the duration of a condition, reoccurrences, risk of further reoccurrence and the cause, which could include grief or stress. What qualifies as a mental health disability may not always be a medical condition, says Toni-Ann Barnett, life risk analyst at Canstar. The main mental health afflictions affecting Australians are depression, anxiety, bipolar and post-natal depression, she says. When considering a case, underwriters will look at treatment, including medication, counselling and time off work. Some companies offer cover with a mental health exclusion; other companies look at the cause. An example could be someone stressed at work who has since changed employer.
Tell a story
Often people can hide conditions. No doubt there is overmedication in society, and all medical records are accessed during initial assessment and when claims are made. As more lives are insured, individuals who would not consider themselves as hampered by mental health issues but who have become used to taking antidepressants for whatever reason will have to face up to insurers’ interpretations of medical assessments.
Barnett has clear advice for individuals taking out life cover. “If you want cover and you have had a history of some form of mental illness, tell a story,” says Barnett, who has worked with advisers in previous roles. “Put as much down on paper as you can with your adviser, and put your case forward. We’ve certainly got some sad situations over the line and got these people covered.”
The life insurance industry is fully aware there is an underinsurance problem, Barnett says. “They want to get these people covered. There is a need there for all these families.”
The change in culture in the superannuation industry is also evident at the coalface, with staff education targeting awareness and strategies for dealing with policyholders who are afflicted. The call centre staff at REST industry fund have been trained in some cases by educators who themselves suffer mental health problems and who can explain their needs. “Sometimes we have issues where members threaten self-harm,” says REST chief operating officer, Paul Sayer, “and we have processes in place to deal with escalation of those processes.” Support for those in lower socioeconomic groups who suffer mental health issues is too often lacking, Sayer says, and those who threaten to do something to themselves sometimes eventuate to death claims. “That’s where training and support are valuable,” he says. “It’s in no one’s interest to have people self-harm. We want people to have a good life.” REST chief executive Damian Hill is the chair of SuperFriend, the mental health foundation established by industry funds to find ways to improve workplace conditions for members. One SuperFriend initiative is RUOK day in September, when it’s encouraged to give your colleagues a chance to open up about anything that could be troubling them. Many in the office need no excuse to divulge themselves, but it is the ones who push their problems deeper inside who are being silently encouraged on RUOK day.
Like REST, leading insurer AIA has invested in staff who are specialised in mental health and in the training of underwriting and claims staff. “We have regularly arranged meetings with specialist mental health organisations where people with mental health illnesses are invited to AIA Australia’s offices in order to give our underwriters and claims assessors a personal understanding of the day-to-day lives of people with mental health illnesses and how they cope,” says AIA Australia general manager of life insurance, Damien Mu. He says best results are achieved when an insurer works with a client’s health practitioners “in the provision of specialist staff, augmentation of rehabilitation options and coordinated approaches to return-to-work within an ethical framework”.
As insurers and the health sector set common objectives, some Australians will feel their lives slowly become less strained, and the clouds will begin to part.