Understanding mental health and life insurance.

If you read the headlines, you can be forgiven for thinking that insurers don’t understand mental health. Certainly not the nuances between a ‘tough patch’ as a response to a normal life and a debilitating condition. With 1 in 5 Australians experiencing mental ill health, it’s a topic that’s not going away, so we spoke to our Chief Underwriter and industry veteran, Scott Hodgson, for his perspective on why insurers struggle to support and understand mental health. 

Let’s jump right in, Scott. Why do you think underwriters (and insurers) have such a tough time grappling with how to handle mental health?

Scott Hodgson: At a company level, mental health conditions are a major cause of claims, and so life insurers want to understand the risk to manage it over time (so they can get the pricing right). It’s a very sensitive topic at a personal level and so advisers and underwriters find it hard to discuss with some applicants. Plus, it is difficult to properly classify the risk when assessing it, as individuals all have different responses to life events – and different diagnoses can often be made for what might be similar triggers for a mental health issue.

Additionally, there are no universal clinical indicators, for example blood tests, for mental health conditions, so diagnosis and treatment requires skilled practitioners, and even the medical profession finds treating mental health patients complex.

What is your view on exclusions related to mental health?

Scott Hodgson: I’ve seen a worrying trend of automatic exclusions without really understanding the situation. If for example, you have a major life event (loss of a loved one for example) and you see a psychologist, perhaps you’re even on medication temporarily, but you didn’t take a heap of time off work and this was years ago, I don’t see why this would mean an exclusion. But because the risk cannot always be quantified it is necessary to exclude in some cases. This is preferable to not offering cover at all, and of course over time the exclusion can be reviewed. Once sufficient time has passed and the condition is managed well (or has receded) then the exclusion may be removed.

Is there any good news on this front in terms of changing attitudes, policy and research?

Scott Hodgson: Fortunately we now have good public policy around mental health, much more openness and de-stigmatising in general as well as better training of general practitioners in respect to mental health, plus access to Medicare supported sessions with psychologists. So while it might seem like mental health conditions are at epidemic levels, it is simply that these conditions are now being discussed and disclosed. Hopefully this leads to much better management than in the past. In time gone by you may remember a neighbor or relative who had a “nervous breakdown” that was discussed in hushed tones? These days anxiety and depression related to life events should be considered manageable conditions, that need empathy from the community.