Hello and welcome to your Peace of Mind Podcast I'm Elayne Grace

Insurance aims to give people ‘peace of mind’, but how well does it protect people experiencing mental health problems? At the Actuaries Institute we're talking with consumer and advocacy groups, insurers and the industry bodies to identify how improvements can be made The problems raised by mental health conditions in the insurance sector are many and complex In this episode, we'll ask the experts how improvements can be achieved, from product definitions and design to expert neutral evaluation All this and more on Peace of Mind, your Actuaries Institute Podcast With mental health awareness on the rise, there's no doubt the insurance industry must respond to the changing needs of its customers

We need to explore products and services that meet people's needs that are also affordable and sustainable Today we welcome back Geoff Atkins principal of Finity and co-author of our mental health Green Paper Welcome back Geoff Thanks Elayne Geoff, how can improvements be made? What areas should we be investigating further? Elayne it's a big and difficult topic

It sure is I learned such a lot during helping prepare the Green Paper, and I feel like I don't know what I don't know, so I'm very cautious about saying how improvements can be made and where and so on We did ask a lot of questions and we listened to a lot of people and we read a lot, so we're trying to give some sort of guide about where the real experts can invest their time for a good outcome It's fair to say that a lot of their suggestions you put in the paper have really come from your conversations with the stakeholders and in written material that you've researched It's really drawing on a lot of the expertise externally as well

Insurance contracts are technical and complex, can we make it a more usable definitions and criteria that deal with a particular circumstances of mental health conditions? Definitions that were not derived in respect of heart attacks or strokes or broken legs, but things that are more specifically reliable Can we have inclusions in products that focus on wellness and recovery beyond just financial payment? How does insurance contribute to people's recovery and wellbeing in ways other than only money? It's arguable that large lump sums are not especially useful in respect of mental health conditions, for example, out of the superannuation fund Would it be better if there were time limited income streams, which were integrated with other mechanisms to support recovery? Enable people to retrain, get back to a productive life in a different area and not have to spend their next year and a half arguing about their lump sum insurance claim Yeah It's a simpler process always to give money, but it doesn't always actually help the person, that's

Perhaps as much in this area as any part of the research deals with that kind of topic It's challenging, it's morally challenging, but if one doesn't understand it and tackle it, one's missing the point Yeah of course

Similarly, I guess with product definitions, often you can actually buy a product for a long period of time The idea with product definitions is, they're there to protect people, so that the cover is guaranteed and insurers can't get out of that cover Of course that's really difficult when mental health when you're having developments all the time and society you know asked you to changing It's a really good example, where the social systems that we have, legal systems don't really quite work well in this situation For example, I think many superannuation funds would really like to change the offerings and the definitions that they provide their members

The law actually makes it extremely difficult to do that Even more so with life insurance contracts, it's probably illegal for the insurance company to change it, but it can be done in little ways, but wouldn't it be a good thing if it could happen in a way that actually protects and helps the consumers rather than being stuck with something that was written 40 years ago? Yeah, so the law that's out there to protect consumer can sometimes actually be a hindrance It can Having said that of course, for some people it's not good, because obviously there for the mental health conditions aren't covered so well Of course that can also have increase impacts on increasing affordability and other issues I guess

It's the fine balance of insurance between offering good protection at an affordable price in a sustainable system That's exactly it That balance doesn't have a single answer It can be different in different environments, and I don't think that we've been particularly good at aligning groups of products that sit in different places on that balancing spectrum, and certainly the problems with the superannuation funds and the group insurance The life insurance companies that issue those products, they have lost a very large amount of money over the last five years

Mental health claims are not the only cause to be clear about that, but they are a significant part of the issue If the products are covering an awful lot more claims from mental health conditions than they were 20 years ago, A, do you work the price up, which has been happening a lot? Yup Or B, do you try and tailor or reduce the coverage somewhat, not necessarily only for mental health claims? I guess that's what a commercial market aims to do, to find that balance In terms of underwriting guides, what advances or changes do you think could be improved there? Well, in lots of types of insurance, not all, when a person applies for their insurance, they need to give various information about the risk level that they represent, and the insurance company needs to make a decision about the relative risk There are very well established medical underwriting guides, tremendously sophisticated books about probability of certain events arising after a cancer or after a surgery of a certain kind or with diabetes

Those things don't exist in any consistent quality way in respect of mental health conditions There are some and people are working on it, but for example, a comprehensive and reliable and trusted guide to subsequent risk levels, responding to various mental health conditions would be very useful in helping the insurance companies make an assessment Advise their customers to what their decision is and why, because people do a lot better if they understand why decision's been made than just being told no I think there are many insurance companies that have a difficulty with that in respect of mental health and therefore have been shying away from offering it I think travel insurance is a classic example

Yeah, and obviously we've seen recent changes there Tell us a bit more about that Well, most travel insurance products sold in Australia have a blanket exclusion for mental health conditions If I'm travelling in Canada and I get run over by a car, the travel insurance will pay for my hospital care, will fly me back home If I have a psychotic episode, the travel insurance policy provides nothing

Simple exclusion, they just don't want to go there? That blanket exclusion Now, of course we've had a very high profile case in the, an anti-discrimination case about exactly that The finding of the tribunal was that that was illegal discrimination, and so a lot of the travel insurers, in fact some have already announced the product changes and that's being actively worked on They're in exactly that situation, where they need information They need knowledge and data, which at the moment doesn't exist

In fact, that little example about the visit to Canada, that's actually a real live example of the decision that was made at the Financial Ombudsman Service only quite recently and this man did it He never had a mental health condition before He had a psychotic episode, for which he was hospitalized, sectioned if you like in the Australian jargon He had to cancel the rest of his trip His parents flew to Vancouver to bring him back home and the insurance company said correct, technically correctly in terms of their contract, "No, that's not covered

" The Financial Ombudsman Service said, "Because it's illegal discrimination, it is covered" Yeah, okay Sometimes insurers just want to keep their product simple, but it's interesting communities expectations change and we kind of say, "Well, we want more cover from you We want different products We don't want people to be I guess marginalize and how can you actually make that work?" I guess that's why it's so great sometimes to see insurance companies actually taking it and leading and doing that maybe leap of faith in trying to advance their product, even though they don't have all the data, they don't have everything sorted out

Look, it would be completely unfair to say, "Oh the insurance companies are dreadful and they're not doing anything and they don't care" Yeah of course That would be completely wrong Yeah The reason that I think the Actuaries have gotten involved with this is because many of our members and many of the people that they work for are genuinely struggling

In that situation, the focus needs to be on how can we do better If the answer's very easy, we would have already done it When a person applies for insurance, how does an insurance company deal with potential risk levels arising from mental health? At the moment, that's an example where I don't think we're very good at that Looking at the claims side, what specialized skills do you think we need? How do you think we can improve it? Well, look, insurance, when you make a claim, that's when the rubber hits the road Insurance collects up relatively small amounts of money from a lot of people, to form a pool from which quite large amounts of money can be paid to the few who have the unfortunate circumstance that the insurance is designed to protect

The payers have a percent of the premium is that quite high? Typically, a person who's had a medical condition has a comprehensive report from a treating doctor with evidence It's most of the time not that difficult to provide that information to the insurance company, and for the insurance company to either make an assessment from that or if they need to ask their own medical advice, some of them have doctors on their staff For a mental health claim, it just can't work that way, by the very nature of the situation that the person is in At least a very high proportion of the time, if your mental condition is continuing, if it were temporary and short term, that might not be the case Can an insurance company provide an interface with their clients and potential claimants that is more sensitive and appropriate to those circumstances? Now, an insurance company is not a hospital or a medical service or a social service, but in dealing with their customers, can mental health circumstances be dealt with by differently skilled staff? For example, by a specialist team, may be backed up by some specialist psychological resources inside the company, not only to make a better decision at the end of the day about the claim, but to actually make the process of making and verifying the claim, not further damaging to the customer

Yeah, so I guess like obviously insurance companies paid a lot of claims in mental health They did A lot of them are processed well, then of course some of them probably do as you say just by the process alone, cause more grief for the person Then of course some are also disputed, because some of them may be whether it's due to pre-existing conditions or for other issues, by the strict definition of the product, it shouldn't be paid out That's a really difficult message to give a different, a difficult process

It is and insurance companies every day make decisions of that kind, and from time to time they make what's called an ex gratia payment They will make a payment even though legally they would not be obliged to Now, they don't do that likely for obvious reasons, and that also happens in this situation with mental health claims Some of the information that we were able to put together in preparing the paper, showed that in a lot of, in some of the situations, more than 80% of the claims were agreed and paid That the rate of trying to knock back a claim was no different for mental health claims than for these quite a few other types of conditions

Unfortunately, the way of the world is that the person who has a disappointment, has a grief, has a grievance, a person who has no trouble, never says anything about it again Sure In terms of the dispute between an insurance company and a claimant, how can we improve that situation? Well, in insurance of property, insurance of cars and homes, there are pretty effective codes of conduct and a pretty effective legal dispute process, alternative dispute resolution process Very, very few of those claims ever need to go to court Now, it's fair to say that they're probably often not that large an amount, and it's pretty different if you're arguing about your car than your body, or your wife or your child

When there is a difference of opinion between the insurance industry and the claimant, over whether that claim should be paid, how can we improve that process? It's a problem that's tackled every day in lots of lots of different situations, not only in terms of mental health There are disputes systems that have been designed specifically to make that more effective, a less difficult experience, less costly, less adversarial At the moment I don't think that those systems that exist are very capable in terms of mental health Sometimes it's different skill sets, sometimes it's different procedures Sometimes it's a matter of different communication

Certainly trying to find ways that are not inherently adversarial Yeah, a different approach has to be taken with mental health, that's what we're saying I think that's true and in listening to the various experts, and I'm sure we'll hear from some of the medical experts, some of the psychologists and psychiatrists, many of those I think are quite distressed about the whole situation At the moment, mostly one party brings their own expert report Another party gets their own expert report

Unless they can agree and they often do agree, then you're kind of left, well where do we go to from there? Yeah, but maybe talking about the minority of cases here, but for those people obviously it's a big issue Well, it's a minority, but it's a non-trivial number of cases Yes for sure You're quite right Elayne, that for those individual people, it's a very big issue Thoughtful design, which may require changes to laws, probably will require changes to laws and that's always pretty hard to get over the line

Maybe a Mental Health Commission can contribute to some progress in changing some of the laws It's not like there's a burning platform that means we have to have a massive legal reform, but there's definitely lots of areas where bits of relevant laws and standards and guidelines could be improved We're really looking for this expert neutral evaluation here, that's what we're talking about, isn't it? Well, that's one specific approach It's a little bit of a technical term, but it means where the system is designed so that at a very early stage Really, as soon as someone figures out that there needs to be this evidentiary process, that rather than each getting their own evidence, the whole system is that from the very beginning you see someone who is expert and neutral for evaluation It's surprisingly little used in our adversarial system Yeah The people, many of the people that we spoke to just believed it was entirely appropriate and useful in these kind of situations

A clinical person who would also give their client suggestions and advice about courses of treatment, so there's something, you know they're not just investigating you and trying to decide whether you're telling a lie or not Will prepare a report, which goes to the individual, to their treating physicians, to the insurance company and, which forms the basis of a binding decision Early treatment focused on recovery I guess that also can assist here, where rather than it being a long delayed process before it is determined whether a claim is being paid out or not we can change that focus? Early intervention is such a frequently used term, that one almost stops thinking about what does it mean In this area it's just as applicable as anywhere I don't think I've heard a clinical person say otherwise

In the insurance structures that we have, it can take months before an insurance company becomes aware that there is a customer of theirs who may be suffering from a mental health condition and may subsequently make a claim Yeah In terms of the insurance part of the system, there is often just no opportunity to offer any support, you're kind of mopping up after the horses have left the stable There's definitely opportunities to find ways of improving that, whether it's through like in a superannuation fund, whether it's through better linkages and communication between the employer and the fund and the injured person and the insurance company It may in fact involve some of the clinical practices where relevant clinicians know that in this circumstance they may well be insurance involved

Part of their function is to connect up the relevant parties, because a lot of times people don't get the treatment that they really need A, because they don't know it exists, but often because they can't afford it It's kind of ironic that you've got this insurance, but the insurance is not providing you with the treatment, because the insurance company doesn't know about it I know Sometimes when we're talking about this today, it seems like oh it's all so easy, why aren't we doing it, but I think your discussion there just actually how many people are involved

We're talking about the person having the issue, we're talking about their employer, their case manager Then we're talking about the insurance company There's so many people involved and that's why it ends up being so complicated, and obviously we can simplify it, but at the same time it's not that easy and everybody is trying Another engineer, that I, it feels to me like it needs systems thinking It needs an assessment and improvement process that thinks consciously about all the different elements of that system

One part of the system, one person, one group working in isolation is really most unlikely to make significant sustainable improvement Yeah Data collection, analysis and access? In the insurance sector that's the bread and butter Insurance by its very nature is a statistics based, risk based industry Now that's not to say that everything has to just rely on statistics

There are companies that make commercial judgments and experts who contribute their knowledge and expertise At the moment the kinds of data collections are fragmented often not publicly available The travel insurance is a great example of that One of the things that's under discussion in a lot of segments of the insurance sectors is the need to establish and make available relevant data collected in the right way Naturally enough the Actuaries Institute's very supportive of those activities and many of our members will be making contributions to those actions

We're at a stage where we've got very competitive market places with many competing insurers, and it's a little bit of a barrier that they often don't really want to invest time and money on creating information for other people's benefit We've got some work to do there I think it shows again the importance of collaboration As an industry we need to get together, work with these consumer advocacy groups to make sure that we gather that data The Actuaries Institute is certainly very keen on playing that role of what can we not take years to collect, but more what small simple tasks can we do to collect data that's relevant, usable so we can make quick changes? Indeed, that's one of the points that was made to me by several people, that it doesn't have to be grand to be useful

A lot can be done with relatively small resources in a relatively quick time Thanks Geoff, that's a great insight into obviously some of these areas that we think we can do further work on Yeah, gosh Elayne, there is so much that can be done and I hope that we can really help make a contribution to what can be done in the insurance sector regarding mental health Yeah, we look forward to I think seeing what the next few years actually deliver I think insurance companies do want to make a difference

I know consumer groups certainly do and ultimately let's, yeah, let's hope it's a better experience for people who are suffering from mental illness Don't forget the clinicians that are involved The colleges, the professional bodies of the relevant medical specialists share very similar goals If one can find ways of cooperating, that's been a very successful form of collaboration in a lot of situations in the past Well thanks for your time today Geoff

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