For super funds and their advisers

Mental health and insurance still a problem – actuaries

Sue Freeman and Angela Poon

The Actuaries Institute has been holding its annual conference over the past three weeks, as other big associations have done. A highlight during last week’s sessions was to do with workers’ mental health issues and what insurance companies are doing. It looks like progress is slow, notwithstanding all that we hear about what employers and insurers say they are doing.

Speakers at the session on August 18 were Sue Freeman, of Finity Actuarial and Insurance Consultants, Angela Poon, also of Finity, and Andrew Matthews, a former chief actuary of Medibank Private. None of them painted a rosy picture. Generally speaking, Australia’s mental health services are inadequate. Overall, according to Medicare numbers, there is a total hard cost to the system of $9.1 billion a year, with about 2.5 million people receiving some subsidised Medicare mental health assistance and 4.2 million receiving mental health-specific prescriptions.

Freeman said that although people may report mental health systems which required treatment, fewer than 50 per cent accessed that treatment. “It’s common for people to have more than one diagnosis, she said. “And experts may disagree on them… Up to 75 per cent of symptoms emerge early ion one’s life – up to 25 year of age … The claims represent issues for insurers who are more used to dealing with objective medical symptoms. There are big questions about what are ‘pre-existing conditions’ and what will those conditions’ impact be on one’s work capacity. With Workers’ Comp you need to establish causation and link that to the workplace,” she said.

“The lack of data means that it is difficult to make evidence-based decisions.” A paper produced by the Actuaries Institute in October 2017 called for changes but they had been incremental and unco-ordinated, Freeman said. The proportion of people who had a mental or behavioural condition had doubled – from 10 per cent to 20 per cent, between 2001 and 2018. This applied to all types of conditions. While young males continued to make up the greatest proportion, females over the age of 75 represent the fastest growing cohort, according to National Health Surveys.

The COVID-19 crisis would have a major impact of the figures. Freeman said that Professor Ian Hickie of Sydney University’s ‘Brain & Mind Institute’ had predicted that there would be a 20 per cent increase in suicides over the next five years. “You should remember that for every suicide there are between 10 and 20 attempts,” Freeman said. Estimates have the total costs of mental problems as:

  • Sick leave – 6.5 million people per year costing $18.7 billion
  • Social security – covering 469,000 per year costing $8.6 billion
  • Workers compensation – 156,000 per year costing $2.5 billion, and
  • Life insurance – 96,000 per year costing $4.5 billion.

Angela Poon addressed problems in claiming travel insurance due to mental heal conditions. She said a landmark case in 2015 (Ingram versus QBE) resolved a dispute where a girl could not go on a school trip, which had been paid for, but was refused payment by her travel insurer. The court rule4d in the girl’s favour.

Poon said that the most recent information from a comprehensive survey of the market in life insurance, taken in 2011, showed that:

  • 45 per cent of applications on the grounds of mental health were declined
  • 34 per cent of insurers excluded mental health conditions from their policies
  • 16 per cent of insurers increased their premiums for mental health claims, and
  • Only 8 per cent of insurers had no exclusions or additional premiums for mental health problems.

There had been no similar study or survey since 2011, Poon said.

– G.B.

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