Mental illness and suicide represent 10% of all insurance claims in super, ground-breaking new research has found.
Initiated by SuperFriend, a not for profit mental health foundation formed by Industry Super Funds and their insurers, the research project collected five years’ worth of claims data from 13 industry super funds in order to identify the real cost of mental health claims. It found that approximately 10% of all insurance claims made through superannuation funds between 2007 and 2011 were attributed to mental illness and/or suicide.
The cost to insurers of suicide claims during the period was found to be over $200 million, with an average cost per claim of $120,410. Mental illness-related TPD claims cost $147.9 million, equating to an average of $82,960 per claim.
Further, suicide accounted for nearly 26% of all male death claims for those aged between 25 and 34, and mental illness was the cause of 25% of all female TPD claims in the same age group.
The financial and social impact of mental illness and suicide is significant
Titled ‘SuperMIND’ (Super Mental Illness National Data), the project analysed death, TPD and income protection claims related to mental illness and suicide by gender, age and location. Co-producer of the report, IFS Insurance Solutions, said it was first time that data had been collected and benchmarked to identify trends and help drive solutions beyond price rises to manage the increasing rate of claims.
“While insurers do need to think about how they price their offer, product design and the claim process is equally as important when it comes to claims related to mental illness,” said Shane Fielding, Principal of Group Risk at IFS Insurance Solutions.
He explained that a lack of consistent, comprehensive data meant the project was unable to answer why certain trends occurred, but that it provided the most detailed analysis to date of where claims for mental health conditions are occurring and their impact on members.
Using the data from SuperMIND, Mr Fielding said funds could better understand and identify trends – by age, gender or location – and then actively develop early intervention strategies to help reduce the financial and social impact of mental illness and ultimately better support their members’ wellbeing.
CEO of SuperFriend, Margo Lydon, said the research was important because it reinforced the reality that mental health and wellbeing is a risk management issue not just for super funds and their insurers but for government, employers and the broader community.
“Mental illness-related claims are one of the few insurance claim types that a fund and their insurer can influence, lessen and ideally prevent if detected early,” Ms Lydon said.
“The financial and social impact of mental illness and suicide is significant and reinforces the need for preventative measures through greater member and employer engagement and education as well as early intervention, rehabilitation programs and wellness initiatives to help members stay in work or return to work sooner.”
Riskinfo will examine the impact of mental illness on the wider insurance industry in the next edition of riskinfo eMagazine. Click here to subscribe.
This report is alarming.
With death claims at an average payout of $120k and TPD payout $82k.
Industry super is clearly failing in its duty to protect its members, but hey, look on the bright side, there are no adviser commissions!
This information should be presented to government, and Industry funds forced to provide higher auto coverage for their members which doesn’t scale down over age. The $50k minimum imposed by Labor is a joke.
Clearly the general population does not know what coverage they have in their super, and without independent advice this outcome will continue as they will not understand their needs at times of medical misfortune, with families left needing government assistance instead.
And here it is! I agree with Connie’s sentiment.
I find it alarming that industry super funds talk about not paying commissions but they advertise in the media at prime times! Where does this money come from?
Why not spend the funds on looking after current members – ensure they are properly insured, that they understand their insurance but ideally, implement Margo’s Lydon suggestion so that they really never need to put in a claim, the effect of which cannot be given a true dollar value.
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