Reinsurance Company of Australia (RGA) claims manager Roy Johnson said claims for income protection, group salary and lump sum disability policies based on mental health issues traditionally represent about 18 per cent of a portfolio of claims.
While that number has been “pretty set” for a number of years, the insurer clients of RGA have seen mental health claims increase to between 30 and 35 per cent of their portfolios within the last year.
“What we’re seeing is a large percentage of those claims staying on longer – there are fewer people getting back to work,” said Mr Johnson.
Part of the solution may be a more ‘forensic’ approach to claims assessment, according to the director of US company PsyBar, Dr Kelly Wilson, who spoke at an RGA seminar in Sydney last week.
Rather than relying on a claimant’s general practitioner, people can be referred to a psychiatrist for an independent examination to validate the diagnosis.
A forensic psychologist also looks at the medical evidence, medical reports, clinical reports and the person’s full medical history – as well as taking a personality test.
According to Mr Johnson, the approach of PysBar in the United States is a much more scientific method for assessing a person’s psychological state – and their capacity to return to work – than is used in Australia.
“There is little focus on the functionality of the individual who has the mental illness [in Australia],” said Mr Johnson.
Financial Services Council chief executive John Brogden said the idea of a forensic approach to claims assessment was “very worthy of consideration”.
“Anything that puts a bit more science around claims handling and, indeed, underwriting for people with mental illnesses is really important,” he said.
For Mr Brogden, mental illness is much more challenging for insurers than physical health because there is no simple blood test or biopsy than can determine a person’s mental health.
“So there’s no doubt that it is much more subjective to determine the status of people’s mental health in many cases,” said Mr Brogden.
Insurers need more data from health professionals in order to understand the risks associated with mental illness, so they can do a better job of underwriting and assessing claims, he added.
But for Mental Health Council of Australia (MCHA) director of policy Josh Fear, insurers only have themselves to blame for their lack of data about mental health issues.
“The only reason they don’t have that data is that they haven’t been collecting it. They haven’t been offering products. They don’t have the claims history to fall back on,” said Mr Fear.
The MCHA has been frustrated for many years by the inability of the insurance sector to properly understand the risks associated with mental illness, he said.
“What we take issue with in a very strong way is the fact that many insurance companies are lumping all mental illnesses together,” said Mr Fear.
Insurers tend to lump in bipolar disorder and schizophrenia with anxiety disorders and depression, which all have very different risk profiles and clinical signs, he said.
As a result, people who represent a very low risk to insurers (ie, people who have “never had a day off in their lives because of a diagnosed condition”) are lumped in with people who represent a much higher risk, he said.
“We’ve heard stories that suggest that people are refused outright from being granted cover [because of a pre-existing medical condition],” said Mr Fear.
While the MCHA is comfortable with insurers pricing for risk, he said discrimination that is not based on data – for example, imputing that a person presents a risk because they saw a counsellor 20 years ago – could be illegal, said Mr Fear.
“The way insurers are treating unknown risk is to treat it as uninsurable risk. And to us that’s not acceptable, and we suggest that in some cases, it’s unlawful,” he said.
