Hello and welcome to your Peace of Mind Podcast.
I'm Elayne Grace.
Insurance aims to give people 'peace of mind', but how well does it protect people
experiencing mental health problems?
At the Actuaries Institute we're talking with consumer and advocacy groups, insurers and
the industry bodies to identify how improvements can be made.
The problems raised by mental health conditions in the insurance sector are many and complex.
In this episode, we'll ask the experts how improvements can be achieved, from product
definitions and design to expert neutral evaluation.
All this and more on Peace of Mind, your Actuaries Institute Podcast.
With mental health awareness on the rise, there's no doubt the insurance industry must
respond to the changing needs of its customers.
We need to explore products and services that meet people's needs that are also affordable
and sustainable.
Today we welcome back Geoff Atkins principal of Finity and co-author of our mental health
Green Paper.
Welcome back Geoff.
Thanks Elayne.
Geoff, how can improvements be made?
What areas should we be investigating further?
Elayne it's a big and difficult topic.
It sure is.
I learned such a lot during helping prepare the Green Paper, and I feel like I don't know
what I don't know, so I'm very cautious about saying how improvements can be made and where
and so on.
We did ask a lot of questions and we listened to a lot of people and we read a lot, so we're
trying to give some sort of guide about where the real experts can invest their time for
a good outcome.
It's fair to say that a lot of their suggestions you put in the paper have really come from
your conversations with the stakeholders and in written material that you've researched.
It's really drawing on a lot of the expertise externally as well.
Insurance contracts are technical and complex, can we make it a more usable definitions and
criteria that deal with a particular circumstances of mental health conditions?
Definitions that were not derived in respect of heart attacks or strokes or broken legs,
but things that are more specifically reliable.
Can we have inclusions in products that focus on wellness and recovery beyond just financial
payment?
How does insurance contribute to people's recovery and wellbeing in ways other than
only money?
It's arguable that large lump sums are not especially useful in respect of mental health
conditions, for example, out of the superannuation fund.
Would it be better if there were time limited income streams, which were integrated with
other mechanisms to support recovery?
Enable people to retrain, get back to a productive life in a different area and not have to spend
their next year and a half arguing about their lump sum insurance claim.
Yeah.
It's a simpler process always to give money, but it doesn't always actually help the person,
that's ... Perhaps as much in this area as any part of
the research deals with that kind of topic.
It's challenging, it's morally challenging, but if one doesn't understand it and tackle
it, one's missing the point.
Yeah of course.
Similarly, I guess with product definitions, often you can actually buy a product for a
long period of time.
The idea with product definitions is, they're there to protect people, so that the cover
is guaranteed and insurers can't get out of that cover.
Of course that's really difficult when mental health when you're having developments all
the time and society you know asked you to changing.
It's a really good example, where the social systems that we have, legal systems don't
really quite work well in this situation.
For example, I think many superannuation funds would really like to change the offerings
and the definitions that they provide their members.
The law actually makes it extremely difficult to do that.
Even more so with life insurance contracts, it's probably illegal for the insurance company
to change it, but it can be done in little ways, but wouldn't it be a good thing if it
could happen in a way that actually protects and helps the consumers rather than being
stuck with something that was written 40 years ago?
Yeah, so the law that's out there to protect consumer can sometimes actually be a hindrance.
It can.
Having said that of course, for some people it's not good, because obviously there for
the mental health conditions aren't covered so well.
Of course that can also have increase impacts on increasing affordability and other issues
I guess.
It's the fine balance of insurance between offering good protection at an affordable
price in a sustainable system.
That's exactly it.
That balance doesn't have a single answer.
It can be different in different environments, and I don't think that we've been particularly
good at aligning groups of products that sit in different places on that balancing spectrum,
and certainly the problems with the superannuation funds and the group insurance.
The life insurance companies that issue those products, they have lost a very large amount
of money over the last five years.
Mental health claims are not the only cause to be clear about that, but they are a significant
part of the issue.
If the products are covering an awful lot more claims from mental health conditions
than they were 20 years ago, A, do you work the price up, which has been happening a lot?
Yup.
Or B, do you try and tailor or reduce the coverage somewhat, not necessarily only for
mental health claims?
I guess that's what a commercial market aims to do, to find that balance.
In terms of underwriting guides, what advances or changes do you think could be improved
there?
Well, in lots of types of insurance, not all, when a person applies for their insurance,
they need to give various information about the risk level that they represent, and the
insurance company needs to make a decision about the relative risk.
There are very well established medical underwriting guides, tremendously sophisticated books about
probability of certain events arising after a cancer or after a surgery of a certain kind
or with diabetes.
Those things don't exist in any consistent quality way in respect of mental health conditions.
There are some and people are working on it, but for example, a comprehensive and reliable
and trusted guide to subsequent risk levels, responding to various mental health conditions
would be very useful in helping the insurance companies make an assessment.
Advise their customers to what their decision is and why, because people do a lot better
if they understand why decision's been made than just being told no.
I think there are many insurance companies that have a difficulty with that in respect
of mental health and therefore have been shying away from offering it.
I think travel insurance is a classic example.
Yeah, and obviously we've seen recent changes there.
Tell us a bit more about that.
Well, most travel insurance products sold in Australia have a blanket exclusion for
mental health conditions.
If I'm travelling in Canada and I get run over by a car, the travel insurance will pay
for my hospital care, will fly me back home.
If I have a psychotic episode, the travel insurance policy provides nothing.
Simple exclusion, they just don't want to go there?
That blanket exclusion.
Now, of course we've had a very high profile case in the, an anti-discrimination case about
exactly that.
The finding of the tribunal was that that was illegal discrimination, and so a lot of
the travel insurers, in fact some have already announced the product changes and that's being
actively worked on.
They're in exactly that situation, where they need information.
They need knowledge and data, which at the moment doesn't exist.
In fact, that little example about the visit to Canada, that's actually a real live example
of the decision that was made at the Financial Ombudsman Service only quite recently and
this man did it.
He never had a mental health condition before.
He had a psychotic episode, for which he was hospitalized, sectioned if you like in the
Australian jargon.
He had to cancel the rest of his trip.
His parents flew to Vancouver to bring him back home and the insurance company said correct,
technically correctly in terms of their contract, "No, that's not covered."
The Financial Ombudsman Service said, "Because it's illegal discrimination, it is covered."
Yeah, okay.
Sometimes insurers just want to keep their product simple, but it's interesting communities
expectations change and we kind of say, "Well, we want more cover from you.
We want different products.
We don't want people to be I guess marginalize and how can you actually make that work?"
I guess that's why it's so great sometimes to see insurance companies actually taking
it and leading and doing that maybe leap of faith in trying to advance their product,
even though they don't have all the data, they don't have everything sorted out.
Look, it would be completely unfair to say, "Oh the insurance companies are dreadful and
they're not doing anything and they don't care."
Yeah of course.
That would be completely wrong.
Yeah.
The reason that I think the Actuaries have gotten involved with this is because many
of our members and many of the people that they work for are genuinely struggling.
In that situation, the focus needs to be on how can we do better.
If the answer's very easy, we would have already done it.
When a person applies for insurance, how does an insurance company deal with potential risk
levels arising from mental health?
At the moment, that's an example where I don't think we're very good at that.
Looking at the claims side, what specialized skills do you think we need?
How do you think we can improve it?
Well, look, insurance, when you make a claim, that's when the rubber hits the road.
Insurance collects up relatively small amounts of money from a lot of people, to form a pool
from which quite large amounts of money can be paid to the few who have the unfortunate
circumstance that the insurance is designed to protect.
The payers have a percent of the premium is that quite high?
Typically, a person who's had a medical condition has a comprehensive report from a treating
doctor with evidence.
It's most of the time not that difficult to provide that information to the insurance
company, and for the insurance company to either make an assessment from that or if
they need to ask their own medical advice, some of them have doctors on their staff.
For a mental health claim, it just can't work that way, by the very nature of the situation
that the person is in.
At least a very high proportion of the time, if your mental condition is continuing, if
it were temporary and short term, that might not be the case.
Can an insurance company provide an interface with their clients and potential claimants
that is more sensitive and appropriate to those circumstances?
Now, an insurance company is not a hospital or a medical service or a social service,
but in dealing with their customers, can mental health circumstances be dealt with by differently
skilled staff?
For example, by a specialist team, may be backed up by some specialist psychological
resources inside the company, not only to make a better decision at the end of the day
about the claim, but to actually make the process of making and verifying the claim,
not further damaging to the customer.
Yeah, so I guess like obviously insurance companies paid a lot of claims in mental health.
They did.
A lot of them are processed well, then of course some of them probably do as you say
just by the process alone, cause more grief for the person.
Then of course some are also disputed, because some of them may be whether it's due to pre-existing
conditions or for other issues, by the strict definition of the product, it shouldn't be
paid out.
That's a really difficult message to give a different, a difficult process.
It is and insurance companies every day make decisions of that kind, and from time to time
they make what's called an ex gratia payment.
They will make a payment even though legally they would not be obliged to.
Now, they don't do that likely for obvious reasons, and that also happens in this situation
with mental health claims.
Some of the information that we were able to put together in preparing the paper, showed
that in a lot of, in some of the situations, more than 80% of the claims were agreed and
paid.
That the rate of trying to knock back a claim was no different for mental health claims
than for these quite a few other types of conditions.
Unfortunately, the way of the world is that the person who has a disappointment, has a
grief, has a grievance, a person who has no trouble, never says anything about it again.
Sure.
In terms of the dispute between an insurance company and a claimant, how can we improve
that situation?
Well, in insurance of property, insurance of cars and homes, there are pretty effective
codes of conduct and a pretty effective legal dispute process, alternative dispute resolution
process.
Very, very few of those claims ever need to go to court.
Now, it's fair to say that they're probably often not that large an amount, and it's pretty
different if you're arguing about your car than your body, or your wife or your child.
When there is a difference of opinion between the insurance industry and the claimant, over
whether that claim should be paid, how can we improve that process?
It's a problem that's tackled every day in lots of lots of different situations, not
only in terms of mental health.
There are disputes systems that have been designed specifically to make that more effective,
a less difficult experience, less costly, less adversarial.
At the moment I don't think that those systems that exist are very capable in terms of mental
health.
Sometimes it's different skill sets, sometimes it's different procedures.
Sometimes it's a matter of different communication.
Certainly trying to find ways that are not inherently adversarial.
Yeah, a different approach has to be taken with mental health, that's what we're saying.
I think that's true and in listening to the various experts, and I'm sure we'll hear from
some of the medical experts, some of the psychologists and psychiatrists, many of those I think are
quite distressed about the whole situation.
At the moment, mostly one party brings their own expert report.
Another party gets their own expert report.
Unless they can agree and they often do agree, then you're kind of left, well where do we
go to from there?
Yeah, but maybe talking about the minority of cases here, but for those people obviously
it's a big issue.
Well, it's a minority, but it's a non-trivial number of cases.
Yes for sure.
You're quite right Elayne, that for those individual people, it's a very big issue.
Thoughtful design, which may require changes to laws, probably will require changes to
laws and that's always pretty hard to get over the line.
Maybe a Mental Health Commission can contribute to some progress in changing some of the laws.
It's not like there's a burning platform that means we have to have a massive legal reform,
but there's definitely lots of areas where bits of relevant laws and standards and guidelines
could be improved.
We're really looking for this expert neutral evaluation here, that's what we're talking
about, isn't it?
Well, that's one specific approach.
It's a little bit of a technical term, but it means where the system is designed so that
at a very early stage ... Really, as soon as someone figures out that there needs to
be this evidentiary process, that rather than each getting their own evidence, the whole
system is that from the very beginning you see someone who is expert and neutral for
evaluation.
It's surprisingly little used in our adversarial system.
Yeah.
The people, many of the people that we spoke to just believed it was entirely appropriate
and useful in these kind of situations.
A clinical person who would also give their client suggestions and advice about courses
of treatment, so there's something, you know they're not just investigating you and trying
to decide whether you're telling a lie or not.
Will prepare a report, which goes to the individual, to their treating physicians, to the insurance
company and, which forms the basis of a binding decision.
Early treatment focused on recovery I guess that also can assist here, where rather than
it being a long delayed process before it is determined whether a claim is being paid
out or not we can change that focus?
Early intervention is such a frequently used term, that one almost stops thinking about
what does it mean.
In this area it's just as applicable as anywhere.
I don't think I've heard a clinical person say otherwise.
In the insurance structures that we have, it can take months before an insurance company
becomes aware that there is a customer of theirs who may be suffering from a mental
health condition and may subsequently make a claim.
Yeah.
In terms of the insurance part of the system, there is often just no opportunity to offer
any support, you're kind of mopping up after the horses have left the stable.
There's definitely opportunities to find ways of improving that, whether it's through like
in a superannuation fund, whether it's through better linkages and communication between
the employer and the fund and the injured person and the insurance company.
It may in fact involve some of the clinical practices where relevant clinicians know that
in this circumstance they may well be insurance involved.
Part of their function is to connect up the relevant parties, because a lot of times people
don't get the treatment that they really need.
A, because they don't know it exists, but often because they can't afford it.
It's kind of ironic that you've got this insurance, but the insurance is not providing you with
the treatment, because the insurance company doesn't know about it.
I know.
Sometimes when we're talking about this today, it seems like oh it's all so easy, why aren't
we doing it, but I think your discussion there just actually how many people are involved.
We're talking about the person having the issue, we're talking about their employer,
their case manager.
Then we're talking about the insurance company.
There's so many people involved and that's why it ends up being so complicated, and obviously
we can simplify it, but at the same time it's not that easy and everybody is trying.
Another engineer, that I, it feels to me like it needs systems thinking.
It needs an assessment and improvement process that thinks consciously about all the different
elements of that system.
One part of the system, one person, one group working in isolation is really most unlikely
to make significant sustainable improvement.
Yeah.
Data collection, analysis and access?
In the insurance sector that's the bread and butter.
Insurance by its very nature is a statistics based, risk based industry.
Now that's not to say that everything has to just rely on statistics.
There are companies that make commercial judgments and experts who contribute their knowledge
and expertise.
At the moment the kinds of data collections are fragmented often not publicly available.
The travel insurance is a great example of that.
One of the things that's under discussion in a lot of segments of the insurance sectors
is the need to establish and make available relevant data collected in the right way.
Naturally enough the Actuaries Institute's very supportive of those activities and many
of our members will be making contributions to those actions.
We're at a stage where we've got very competitive market places with many competing insurers,
and it's a little bit of a barrier that they often don't really want to invest time and
money on creating information for other people's benefit.
We've got some work to do there.
I think it shows again the importance of collaboration.
As an industry we need to get together, work with these consumer advocacy groups to make
sure that we gather that data.
The Actuaries Institute is certainly very keen on playing that role of what can we not
take years to collect, but more what small simple tasks can we do to collect data that's
relevant, usable so we can make quick changes?
Indeed, that's one of the points that was made to me by several people, that it doesn't
have to be grand to be useful.
A lot can be done with relatively small resources in a relatively quick time.
Thanks Geoff, that's a great insight into obviously some of these areas that we think
we can do further work on.
Yeah, gosh Elayne, there is so much that can be done and I hope that we can really help
make a contribution to what can be done in the insurance sector regarding mental health.
Yeah, we look forward to I think seeing what the next few years actually deliver.
I think insurance companies do want to make a difference.
I know consumer groups certainly do and ultimately let's, yeah, let's hope it's a better experience
for people who are suffering from mental illness.
Don't forget the clinicians that are involved.
The colleges, the professional bodies of the relevant medical specialists share very similar goals
If one can find ways of cooperating, that's been a very successful form of collaboration
in a lot of situations in the past.
Well thanks for your time today Geoff.
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