The sustainability of the life industry is on a knife edge with the rise of mental health claims being a major contributing factor, according to the FSC.
The council says in a statement that as Life Insurance Awareness Week and its 2020 Life Insurance Summit came to an end this was a key take out from the week.
FSC senior policy manager for life insurance, Nick Kirwan says that in Minister Jane Hume’s opening remarks, she outlined that the government was willing to consider allowing life insurers to pay for treatment as an early intervention measure, particularly in relation to mental health-related claims.
Last week the FSC released life insurance claims data from 2019 confirming mental illness is now the highest cause of claim for TPD and the third highest for income protection. (See: Mental Health Tops TPD Claims for Men and Women – New Data).
Life insurers paid $1.24 billion in 2019 to more than 9,500 Australians for these mental health claims, Kirwan says.
He states that if this reform were to be legislated it would allow life insurers to reduce the cost of mental health claims, improving the sustainability of the industry and reducing the cost for life insurance customers.
“Early intervention helps consumers recover from mental health issues, and consumers that recover quicker in turn helps the industry manage its sustainability and affordability – it’s all linked.”
He adds that the council wants a healthy and sustainable life insurance sector with the three A’s for consumers:
- Availability of products
- Affordability of cover
- Assurance that every valid claim will be paid.