Feature

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Mental health processes a major aspect of life insurance overhaul

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Mental health is the number one reason people visit their GPs in Australia today – but many recent horror stories make it seem that life insurers have not caught up with this fact.
 
One woman was told her cover would exclude a broad range of mental health conditions, and that she should avoid seeking mental health-related treatment over the next two years in order to assist in the review of her policy.
 
Another woman with cervical cancer had her life insurance pay-outs ceased because the insurer found out she had sought mental health assistance years before her diagnosis.
 
Situations like these cause great concern to many GPs and their patients.
 
‘I am mindful of the impact of mental health diagnoses on a patient’s eligibility for insurance, especially life insurance, in which patients need to disclose details about past illnesses,’ Associate Professor Grant Blashki, GP and lead clinical advisor for mental health education and advocacy organisation beyondblue, told newsGP.
 
‘It concerns me that this can act as a barrier to patients disclosing mental health issues in the first place and seeking mental health care.’
 
But in the wake of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and the subsequent scandals that have emerged, the Financial Services Council (FSC) is conducting an overhaul of its Life Insurance Code of Practice (the Code).
 
A significant number of the proposed changes to the new Code are specifically focused on mental health conditions, including:

• taking individual circumstances of mental health conditions (including history and severity) into account in underwriting
• people with a mental health condition will be included as ‘vulnerable’
• greater protection for customers during claims interviews
• plain language explanations of the reasons for non-standard terms, such as exclusions
• clearer questions on application forms.

Associate Professor Grant Blashki has long been concerned about the impact of the practises of the life insurance industry on people’s choices to seek help for mental health conditions.

Nick Kirwan, the FSC senior policy manager and author of the majority of the proposed changes, hopes the new Code will help to improve processes of the life insurance industry.
 
‘The ultimate goal is to improve trust and confidence in the sector, and that’s not going to happen overnight,’ he told newsGP.
 
‘But we can only try to increase customer confidence by making sure we are trying to be as fair as we can.’
 
The update has involved a comprehensive public consultation process by the FSC, including roundtables and workshops with the mental health community, town hall events in major cities, and feedback on a consultation draft.
 
The new Code will take effect in July and is set to include 30 changes to life insurance practises, with a significant focus on the handling of underwriting and claims related to mental health conditions.
 
One of those changes involves favouring the use of GP reports over clinical notes in assessing insurance and claim eligibility, a measure on which the FSC is working consultation with the RACGP.
 
‘We hope that will give people more confidence to go and see their doctor, because they will know that if they at some point in the future apply for life insurance or make a claim, the focus will be on getting a report rather than access to people’s clinical notes,’ Mr Kirwan said.
 
The FSC also intends to make the industry’s underwriting questions clearer and fairer, especially in relation to mental health.
 
‘A question such as, “Have you ever had an episode of mental illness?” – does it mean you had a “duvet day”, you went to see the doctor, you took some time off work, you were stressed out, you went to hospital, you had thoughts about taking your own life?’ Mr Kirwan said.
 
‘So we’ve put that provision in to the Code, to ask clearer, fairer questions that aren’t ambiguous, and we’ve tried to include examples about mental health.’
 
There has also been criticism from the community and the medical profession of a lack of nuance in insurance companies’ assessment of mental health conditions, another problem Mr Kirwan wants to correct.
 
‘We are asking life insurers to take into account the specifics and actual circumstances of mental health conditions, including their history and severity,’ he said.
 
Mr Kirwan is also keen to ensure that people making claims for mental health conditions are provided additional protection within insurance company processes, with automatic categorisation as ‘vulnerable’ customers.
 
‘We’ve also included greater protections for people if they’re interviewed about a claim to ensure they understand what they’re going to be asked about and why, how long it’s likely to last, that they can have regular breaks if they want to,’ he said.
 
‘And if people withdraw their claim after an interview, then a different person should check in with them and find out why, and make sure they know that if they want to reopen the claim, they can.
 
‘We want to be absolutely sure that no one is pressured into withdrawing a claim for a mental health condition or any other condition.’
 
Mr Kirwan acknowledges that there is no ‘single panacea’ when it comes to mental health conditions and insurance. But he does hope that with the input the FSC has received from health professionals and the community, the changes to the Code will help to greatly improve the situation.
 
‘We want people to feel they can apply for life insurance with confidence and know that, if they need to make a claim, they’ll be treated fairly,’ he said.
 
Associate Professor Blashki is supportive of the motivation behind the changes, and has similar hopes they will deliver positive changes for the future.
 
‘It is pleasing to see that insurance companies have an appetite for developing more nuanced assessment processes in assessing pre-existing mental health conditions and implementing more finely graded policies,’ he said.
 
‘Given the high prevalence of mental health conditions, this can also be an opportunity for insurers to provide more tailored and fairer products to consumers.’
 
Further information about the updates to the Code are available on the Financial Services Council website.

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beyondblue Financial Services Council life insurance mental health

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