Advisers need to revisit their expectations as to whether a client with mental health issues will be eligible for insurance if the industry is to move forward, says Financial Services Council CEO, John Brogden.
Mr Brogden told riskinfo that there was a critical need for advisers to change their attitudes towards insurance cover for clients with a history of mental illness, because the industry had improved.
… ten years ago people would have been denied insurance if they had a mental illness, but it’s not right to say that now
“Advisers know how the insurance industry works, and they know that in the past many people have been denied health insurance because of a mental illness,” he said, explaining that this often led to the adviser making a decision upfront not to pursue certain types of insurance cover for clients who disclose a mental health issue.
“There is no doubt that ten or more years ago people would have been very quickly denied insurance if they had a mental illness, but it’s not right to say that now.”
Responding to a recent article published in the Fairfax press which criticised insurers for “systemic discrimination against those with even mild mental health problems” (see: Depressed? You’ve got Buckley’s getting insurance), Mr Brogden acknowledged that the industry has been slow to engage and understand mental illness, but said it was important to manage expectations.
“There is no doubt that some people with mental illnesses will be denied life insurance, just as people with physical illnesses will be denied life insurance or will be offered life insurance with restrictions and loadings. That’s no different to people paying a different rate for car insurance based on their age and their performance as a driver. It is a risk rated industry,” he said.
“However, I completely acknowledge and recognise the need for the industry to have a better understanding of mental illness, and therefore a better ability to risk rate it.”
A report on mental health and insurance, published by beyondblue and the Mental Health Council of Australia, highlighted the barriers that face insurance applicants with mental illness. According to participants in the study, all of whom had some history of mental health issues, insurers often treated all mental illness as high risk despite an individual’s circumstances.
One participant commented: “I don’t qualify for the income protection insurance. Despite my letters explaining that my condition has never impaired my ability to work (I always worked FT) and despite a positive letter from my GP this was still refused.”
The report also backed up Mr Brogden’s comments in relation to advisers pre-determining the insurance outcome for their clients: “My broker said that income protection insurance would be too hard to get because of my history so don’t bother applying.”
… we recognise we need to move more quickly
Mr Brogden believes the solution lies not just in fixing the insurance industry, but in getting all of the sectors together to agree on improving access to insurance.
“It’s a case of educating the medical profession about how to talk to insurers about people’s mental illness, it includes the need for underwriting practices to have a better understanding of the different gradations of mental illness and people’s ability to live with and recover from mental illness, and it needs financial advisers to also understand that there is an increased likelihood that they can get insurance for their clients.”
He said he felt positive about the steps currently being taken, but believes the industry and wider community needs to move faster.
“The industry is going through a process presently with the mental health community, the medical community and the Government… to actively look to improve the access to life insurance for people with a mental illness.
“Minister Bill Shorten has indicated a willingness to get more engaged and drive the agenda, and we’re very keen to facilitate that and work with the Government.
“So, the industry is improving. We’ve moved slowly, and we recognise we need to move more quickly,” added Mr Brogden.
Again John Brogden has opened his mouth to give us his unqualified opinion. First the ‘churning’ joke and now this. John, here’s a tip, go and sit with a few risk advisers and see that we don’t make assumptions and we do work hard to mediate a favourable underwriting solution for out clients. Its called Professionalism and by far the majority of the risk advisers that I know, have it in spades.
Brogden is an idiot. He is less qualified to make comment on the insurance industry and the impact of Mental Illness than any adviser in it. Does he seriously think we will not try anything we responsibly can to get the client the cover, and in the process, get paid. It’s a smoke screen.
Also, If mental illness was excluded 3 years ago for a client and the adviser can get cover now without an exclusion, is that churn Mr Brogden?
I don’t understand the intent of this article.
Across the six insurers that we often use, I have never ever seen anything but a mental health exclusion applied to anyone with a mental health problem.
How are the advisers going to change their mindset when there does not appear to be any insurers that will offer cover without this exclusion?
It would have been good for examples to be provided of insurers that will offer cover without mental health exclusions or that are working more closely with the medical profession to find ways to provide better terms to these clients.
Here we go again, it is the good old advisor who as usual cops the blame! Perhaps Brogden should talk to Insurance Companies and their underwriters first before making outlandish statements that about advisor attitudes towards mental illness. Advisors have always been at the mercy of insurance companies, their underwriters and their reinsurers and it is not a case of us having “attitudes”!
Admittedly there are those that do need medication due to serious health issues but too often the doctors are the problem.
At times way to quick to hand out the pills I got jelly beans when I was a kid now anti depressants seem to be the quick fix – youve got a problem heres a pill dont deal with the problem take a pill and you will feel better about it.
As a was recently said if I dont deal with the problem it affects my ability to work if I take a tablet I can work but I cant get insurance.
Maybe the insurance companies need to do what they are supposed to take on risk thats what theyre paid for they are happy to take the premiums as long as they dont have to pay out.
I also don’t quite understand the intent of this article. I too have never had an issue insuring people who suffer a history (or currently) of mental illness. The most common outcome for an occurrence within 5 years is a Mental Health Exclusion for disability policies. Unless there is severe ongoing issues or complications then there is not normally any issues obtaining coverage. Even when there are severe issues there are normally options available!
I agree with John and his article in regards to moving on with insuring people with prior mental illness issues, but I disagree that it is an advisor problem. After 20 years in the industry & with farmers who feel down so the Dr prescribes them a course of anti depressants, & if they take or not it is the insurance company underwriters that are the ones who won’t budge & allow cover. We have had numerous cases where we have gone into bat for the client & it is the underwriters who put up the defence that the client is uninsurable. Maybe the insurers need to understand the issues to stop the discrimination.
Who will pay the cost of the extra time that the advisers have to spend on each case ?
It takes mpnths of effort often with a poor outcome.
I have been working on one case since 2002.
That mental health exclusion is a lawyers picnic -it can be used to deny a claim on just about anything
I’m aware Brogden has some personal experience in this area but he is barking up the wrong tree.
Firstly, stop talking to fund managers and instead talk to life insurers.
Secondly, convince the bankers who run large insurers like they do banks ( short term focus, money at work ) to run their life insurance businesses on a long term focus, understanding they are in the business of paying claims(and cost premiums accordingly )and build relationships. Good adviosers can still sell expensive but worthwhile policies – order takers can make their own arrangements.
The big bank-owned insurers have all tightened up on their underwriting-there are some ridiculous decisions coming out rigt now
Thirdly, tell the life insurers to stop accepting life risk business thats not underwritten-eg group contacts with super funds, TV offers etc
Finally, encourage competition amongst re-insurers
Oh BTW John-you might ask insurers why there are no psychiatrists as CMOs ( or deputy CMOs ) at life offices
Michael is correct in that GP’s are tending to presribe anti-depressents in increasing numbers, which in many cases were not necessary,as clients have told me that when the opening words from the doctor were; what seems to be the problem? many clients had stated, I am a bit stressed with work and the family and “whammo” tne next minute they are out the door buying pills that were not necessary,which they took for a few days and threw them out after finding the pills were causing more harm than good and then finding themselves with more stress when trying to get Insurance.
Doctors need to be made aware of the implications of willy nilly prescribing medication and should ask a few more questions to determine if their patient is actually depressed or just like the rest of us,overworked and under appreciated.
Jeremy you are spot on-crap medicine being practiced by doctors who are forced by the Medicare system to justify long consultations where better discovery could be done
For about 15 years now GPs have been coming out of medical schools force-fed a ” holistic medicine approach ” ( why is that term familiar ).
The first question is usually ” how are you feeliing within yourself ?” Answer-“I feel stressed” In our society who doesn’t work under stress of some sort of stress, buts it not usually a predictor of mental illness.
Worse still-some well-intentioned employers offer free psychological counselling in a work-place and people love free services. The person may never get to see a psychiatrist or take medication BUT IT SURE AS HELL TURNS ON THE UNDERWRITERS RED LIGHTS AND ALARM BELLS
Sorry for taking a second bite at the cherry
I find it fascinating to read all these comments from medically qualified peple on mental health issues! Oh, sorry, none of you are. Well, sure seems like you all are!
Furthermore, at the current time, backs and mental health issues are the major claims areas for all insurance companies! Having said this, there has been a major change in what insurance companies offer and decline.
Yes, 10 years ago most mental health issues were declined for IP and TPD cover. These days, we are seeing many more clients with this history being offered IP and TPD with exclusions. There are also some who manage to get cover without the exclusions, but, in view of the recurrent nature of many mental health issues, the decision currently is to try and offer cover with a mental health exclusion. The only other option (apart from declining) is to offer no exclusions, but then watch the base premiums skyrocket with major increases in claims costs.
I think John Brogden fully understands the situation. The major issue is that it is all our responsibilities to try and understand and get cover cover for our clients, regardless of the medical situations.
Welcome to the mental health debate Sean. Good to see someone obviously employed in some way by an insurance company joining the discussion.
Now – can I assume YOU are medically qualified in the appropriate medical discipline?
In this debate, what most risk writers object to is the black and white nature of the underwriting decision process when there is some evidence on an application that the applicant may have, at some stage in recent times, even answered a casual question from his doctor, on a visit for another purpose, that he was feeling ” stressed ” at work.
My recent underwriting experience has been that even the disclosure of a “one off” casual visit to an ” employer provided ” counselling service, with no subsequent references to other professionals, and no medication prescribed, instantly means the application of a mental health exclusion.
And on the assumption that you Sean are employed by an insurer, you ought to be aware that that mental health exclusion is usually a barrister’s picnic, and that just about any form of illness could be argued to be, even in some remote way, associated with a ” mental health condition.”
What advisers want from life insurers is a considered, individual decision based on the evidence before them, including the adviser’s field underwriting notes, and understanding from the underwriters that what actually happens in the real world.
We get very annoyed when an underwriter takes a course of action which only involves consulting the appropriate re-insurer’s guide. This action conveys an impression to us that they are not prepared to look at an individual case.
We did seem to progress when Jeff Kennett took over Beyond Blue because, as you correctly say, before that it was a straight out decline of an application for an income protection policy, if there was any disclosure of mental health issues. Beyond Blue, I understand, liaised with the industry and attitudes softened in the underwriting process.
Regretfully, in the last year or so it has all gone backwards. I suspect this hardening of underwriting attitudes is driven by the bank owners of most of our large insurers wanting more return for their investment. Added to that is the impression that some Claims officers seem to have a view that if a client, after many years of work, suddenly has a mental health issue, then there has to have been non-disclosure somewhere in the distant, or even far distant, past. That makes underwriters nervous.
I would be delighted to hear from the inside as to whether or not there is any intention to go back to meaningful individual consideration of each underwriting case on its merits rather than the current gut reaction attitudes permeating from the insurance companies.
And with some companies, a mental health exclusion, added to a couple of exclusions for old sport related knee arthroscopies, now means the applicatioon of a ” 3 strike rule ” and decline.
I think its time some life offices asked themselves are they still in the insurance business, with its long term focus, and costed the product appropriately.
Unfortunately this debate is meaningless and a waste of everyone’s time/energy, while mental illness claims account for one third of all IP claims and 15% of all TPD claims in Australia.
That is unless we can cover what would be a catastrophic short fall in claim reserves by:
– paying many times the premiums we currently pay for the same cover?
– John arranging the funding via government or corporate means (good luck with that).
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