Insurance industry slammed by mental health advocates

Insurance industry slammed by mental health advocates

Insurance industry slammed by mental health advocates The insurance industry often has its fair share of critics, but few are as high profile as this.

In a recent ABC news report, the industry came under fire from mental health advocates who openly questioned the approach of insurers in dealing with people who have mental health issues.

The report focused on the case of 17-year-old Ella Ingram (which we reported on earlier this year) who was set for a school trip to New York. However, shortly before the trip she was diagnosed with a major depression and hospitalised.

Her family attempted to claim for the cancelled trip on their travel insurance policy – only to find the claim was rejected on what was described as a blanket exclusion of mental illness. So frustrated were the Ingrams with QBE, their insurer, that they actually challenged the company in court – and, in December last year, the Victorian Civil and Administrative Tribunal ruled that the company had unlawfully discriminated against Ella based on her disability.

However, the ABC report quoted mental health advocates who believe little or nothing has changed since the court case. Gary Galambos, chairman of the NSW Branch of the Royal Australian and New Zealand College of Psychiatrists, for example, claimed that he had patients who were “fearful insurers will exclude people from products if they’ve seen a psychiatrist”.

“It’s doesn’t make sense… [it’s the] Dark Ages,” he said.

“The insurance industry should be encouraging their people to see us, and be reassured that help seeking people are help seeking people, and are less likely to be a risk for these companies.”

The report goes on to slam insurers suggesting there is “evidence insurers use even the most benign information from our past to assess your risk to their bottom line”. It reports on one case of a school leaver who had seen a school psychiatrist and was ultimately excluded from having insurance.

In addition, it suggests that insurance companies are “undermining” efforts to tackle the stigma associated with mental health issues.

It goes on to highlight the federal disability discrimination law’s provisions for the insurance industry and that insurers can use data to explain why covering an illness would be unsustainable. However, it accuses the insurance industry of failing to make this data public, although Andrew Bragg, of the Financial Services Council, states “we’re not in the business of disclosing commercial in confidence material… but we are open and committed to having an ongoing dialogue with mental health advocates.”

So now we put the question to you, the professionals of the insurance industry in Australia. Do you believe that mental health issues are being treated unfairly by the industry… or are the intricacies of insurance being misunderstood by this mainstream report? Leave us a comment with your reaction, below.

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  • Robert Cooper 28/11/2016 10:54:12 AM
    On the face of it, yes it may appear so. But I think Mental illness is a very widespread issue. I believe most people will suffer some sort of mental illness in their lives, some worse than others. At the moment there is much stigma attached to it. Very few seek help because of such prejudices. Most prefer to self-medicate with Alcohol or Drugs hiding it from most until too late. So how do you measure that as an insurer? Put Insurance premiums out of reach covering something that is widespread, or exclude it and concentrate on other injuries or illness?
    Mental illness needs to be treated under our Medicare system and loss of income with Social Security, not put Income Protection policies and other Personal Accident and illness covers including Travel out of reach for the other events we need coverage for.I for one would gladly like to see our Medicare Levy increase to include better services in this area.
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  • David Stott 28/11/2016 11:53:00 AM
    I think the Mental Health exclusions used by General Insurers are way to broad & common.

    These exclusions are effectively throwing a blanket exclusion over the brain. Far too many health conditions list depression or anxiety as a side effect. Healthy people readily accept Mental health exclusions on the basis that 'it will never happen to me' but the reality is quite different. A current TV commercial suggests that 1 in 5 Australians will suffer a mental health condition. The concerns raised by the advocates are valid in that once this target has been put on your back, the insurance industry will not forget.

    There may be valid statistical information to confirm why covering Mental Health conditions is an uninsurable risk but this is hard to understand when it's being readily addressed by Workers Compensation, Income Protection & Health insurers.

    As Brokers we might play a part in explaining the nature & effect of these exclusions to clients. If it's a concern & it's fed back to insurers, they may come up with alternatives. I recall that Flood was treated with the same broad brush approach until recently (and now that it's in place, it's hard to recall what all the fuss was about).

    Where in the business of protecting people from risks & it's a shame that one that's so personal & potentially devastating is being swept under the carpet. Whilst the insurers may have protected their bottom line by utilising an exclusion, it doesn't mean that the risk should be ignored.
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  • Underwriter 28/11/2016 4:06:05 PM
    People need to really look at what type of insurance they are talking about and for what purpose. Working in the corporate area, where there is a "self harm" exclusion, but not necessarily a "mental illness" exclusion is all there is. If a condition is pre-existing, sure it may not be covered. However, there are many instances where such illnesses would be covered. Years ago I was managing two claims concurrently for individuals suffering schizophrenia.
    As an underwriter, sure there are reasons why you don't want to write such risks, but those need to be measured against the overall portfolio. In the leisure travel space, it's been easy enough to just exclude, but that's what the media seems to be focussing on. I don't work in life insurance, so maybe it's an issue there also?
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