Financial advisers need to gain a better understanding of mental health disorders in order to best serve their clients at claims time. Tackling this issue, however, will require a collaborative effort with life insurers.
The financial advice industry can no longer ignore the issue of mental health. Forty-five per cent of Australians will experience a mental health illness at some point in their lives, with one-in-five experiencing it in any given year, according to the Black Dog Institute. As a result, the financial adviser’s role is arguably no longer just around managing a client’s wealth, but also managing their mental wellbeing.
This is especially true when recommending appropriate risk cover for their client, particularly in the areas of income protection and total and permanent disability (TPD). However, this is easier said than done given the industry-wide stigma and misinformation around mental health issues. A 2011 survey conducted by Mental Health Australia and Beyondblue found that life insurance companies appeared to automatically categorise mental health conditions as “high risk”, regardless of the person’s individual circumstances. “Insurers made broad assumptions about a person’s ability to maintain employment and their general level of functioning, which in turn had negative implications for their application,” says Beyondblue general manager Nadine Bartholomeusz-Raymond.
“Several [survey] respondents mentioned the embarrassment, humiliation and insensitivity surrounding interactions with an insurance provider, while others also mentioned how their interactions with insurance providers have impacted negatively on their mental health.”
If advisers are to better look after their clients, a better understanding of mental health issues is required in addition to partnering with life insurers.
No claim is the same
According to the 2011 survey prepared by Mental Health Australia in collaboration with Beyondblue, 61 per cent of respondents whose claim related in some way to a mental illness indicated that illness was depression. The next most common mental illness was anxiety disorder at 32 per cent. However, it is important for advisers to consider that each client’s case is unique and must be assessed on its own merits, says Fitzpatrick Financial Services specialist life insurance adviser Ben Day.
Mr Day notes, for example, that clients with mental health issues are rarely told to stop working long-term – contrary to popular belief. “I’ve spoken to mental health professionals who have said the last thing the vast majority of clients want is long periods off work,” he says. “Sitting at home often makes depression and mental health worse and insurers need to understand this and not treat every claim the same.”
Mr Day says this also should apply in the underwriting process. “A simple phone call by the underwriter to the client to discuss their issues could help greatly and enable the underwriter to get a clearer understanding from the client’s perspective,” he says. According to Beyondblue’s Ms Bartholomeusz-Raymond, advisers need to be proactive in requesting their industry body, whether it is the AFA, the FPA or the FSC, to develop an education module or standard to educate advisers about mental health conditions.
“The more an individual adviser has personal understanding of mental health conditions and the people behind the label, the more the barriers and stigma surrounding mental illness in Australia will be removed and the better experience a person with a mental health condition will have,” she says.
Ms Bartholomeusz-Raymond says the most important thing an adviser must keep in mind is not make any judgements about a client’s ability to maintain employment, general level of functioning or mental state, as this contributes to the stigma of mental health conditions, which causes harm to individuals and communities. “To further support people with mental health conditions, develop your understanding of each individual person’s circumstances and use this information to apply for the most suitable insurance policy for that person,” she says.
Mr Day adds that some insurance companies are considerate and will review the applications on a case-by-case basis, treating the claims based on severity and the individual circumstances. But he also notes there are a number of companies who have a blanket approach with no flexibility or consideration. “An example is just before Christmas last year, where one of my clients had a full decline applied to all cover due to a client recently going on a mental health plan,” Mr Day says.
“The mental health issue was very mild, so I referred it to another insurer who approved all cover with a mental health exclusion on TPD and income protection only, with a promise to review the exclusion in two years, which was fair.”
It is in cases like these where it is key for the adviser to maintain an open line of communication with their client during both the underwriting and claims process, according to Mr Day. “It is important to get a clearer understanding of what the issue is and not be afraid to talk to their clients,” he says.
“The adviser can then talk more freely with the insurer in both situations with a clear understanding of the situation.”
Proving an illness
Other concerns brought to light recently relate to the processes clients go through to prove they have a mental health issue. ASIC highlighted in its Report 498, Life insurance claims: An industry review that 51 per cent of the mental health-related claims disputes it reviewed were related to the provision of required evidence, while 15 per cent related to non-disclosure. In both cases, the proportion was significantly higher compared with its general data on claims related disputes.
The report shows that a challenging burden exists for policyholders to establish that their mental health condition entitles them to make a valid claim. Evidence required for a valid claim includes the need for policyholders to attend psychiatric assessments, complete activity diaries, submit regular progress claim forms, provide medical reports and attend interviews with private investigators, as well as being the subject of surveillance.
ASIC says around 5 per cent of the disputes it reviewed regarding evidence involved an allegation by the policyholder that their insurer had engaged in investigation and surveillance practices that they believed to be unfair or unreasonable, or even exacerbated their condition. “Although we recognise that insurers need to use fraud management systems to ensure that only genuine claims are accepted, the vulnerability of claimants with a mental health condition must be considered as a part of these systems, as should the probative value of a surveillance for these types of claims,” the report says.
Life insurers take action
Despite these concerns, there has already been movement by life insurers to improve the experience for clients with mental health issues. This is evident from the submissions and testimonies to the recent parliamentary joint committee inquiry into the life insurance industry.
CBA’s CommInsure acknowledges in its submission to the inquiry that the financial services industry as a whole can do better in relation to mental health, recognising the challenges ahead for government and businesses. It says it is working with the Financial Services Council (FSC) to consider areas for improvement, and has begun discussions with experts in patient care and mental health matters to begin developing reforms in the area. CommInsure managing director Helen Troup says that, for the insurer, addressing mental health is about breaking down some of the boundaries of the other key relevant stakeholders, namely the doctor and the client, and working together in partnership.
“When we think about what we, as the insurer, and what the medical practitioner is doing in terms of helping that person recover, and then you have got the patient, we need to form a tripartite relationship to ensure that they are getting better,” Ms Troup says.
In the case of ANZ’s OnePath, it provides a training program for claims and underwriting staff in mental health and education and medical knowledge. In addition, all OnePath claims and underwriting staff are required to complete annual mental health awareness training as a requirement of its membership of the FSC. ANZ group executive for wealth Australia Alexis George says OnePath has a proud claims record, has a strong claims philosophy and holds itself accountable to its customers.
“To support the growing understanding and issue of mental health in our society, we have established a specialist claims team focused solely on these types of claims,” Ms George says.
“It should be stressed that our chief medical officers are not employees. They have their own practices and are paid on a fee-for-service basis.” Ms George adds that mental health is something that both the insurance industry and the medical profession are learning about every day, and that it is now the biggest component of its book on income protection.
“If I look at our income protection book, something like nearly 30 per cent of claims now are attached to mental health, and it is growing,” she says. “We need to engage with the associations to build some standards going forward about mental health, the data we have around mental health and how we use that better into the future.”
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