Mental illness and suicide claims cost the group life insurance industry almost $350 million between 2007 and 2011, new research has found.
Thirteen industry super funds have partnered with six major group insurers to analyse data from 4.1 million member accounts over the five years from 2007 to 2011.
The data has been collated in a study by the industry fund-backed mental health foundation SuperFriend, in association with IFS Insurance Solutions.
"Over a five-year period claims related to suicide collectively cost the super funds’ insurers over $200 million with an average cost per claim of $120,410," said the report.
"Mental illness-related total and permanent disablement claims cost $147.9 million, at an average cost per claim of $82,960," it said.
The study also found 10 per cent of all insurance claims within super were attributed to mental illness and suicide.
Speaking at an Australian Institute of Superannuation Trustees luncheon in Sydney, SuperFriend chief executive Margo Lyndon said improved product design, claims processes and use of big data in the superannuation and insurance industries could have a positive impact on mental health claims.
Mr Lyndon said mental illness and suicide have significant impacts on members both financially and socially, affecting not just families but workplaces also.
The results showed the proportion was even higher in certain age groups, with suicide accounting for nearly 26 per cent of all male death claims in the 25-34 age group and mental illness accounting for 25 per cent of all total permanent disablement claims for females in the same age group.
IFS Insurance Solutions principal of group risk Shane Fielding said this is the first time data has been collected and benchmarked to identify trends and help drive solutions beyond price increases to manage the increasing rate of claims.
In the past couple of years, Mr Fielding said the insurance industry has already begun to make some “significant improvements to their claims process and start to address not only mental illness but claims in general to ensure the outcome for the actual claimant is a good experience”.
Claimants experiencing delays in getting a claim admitted may be without income for an extended period of time, placing financial stress on the family which has the “potential to morph into a mental illness”, he said.
“[Insurers] are now starting to think about the actual product and if the design of the product addresses member needs so that we can actually have early intervention opportunities and rehabilitation opportunities that are going to significantly impact the claim course,” he said.
Ms Lyndon said she would like to see a standardised classification for claims to improve data quality.
“Some of the classifications for claims for mental illness were very generic and others were down to specific illness types; what we would love to see is a standardised classification of mental illness claims across the sector,” she said.
Providing staff members such claims assessors, claims managers and client relationship managers with the right skills and capabilities is something that Ms Lyndon also sees as important in addressing mental health.
“Superfriend has some industry-specific training which we have developed out of consultation with the sector, so it’s really about engaging in that training, and providing their frontline staff with opportunities to make a difference,” she said.
Twelve investment consulting firms, which control assets of approximately US$10 trillion, have announced the launch of the Net Zero Investme...
As NSW and Victoria present their own road maps out of lockdown, many Australian wealth management leaders are striving for a return to “n...