Insurance industry slammed by mental health advocates

by Paul Lucas 28 Nov 2016

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 New Zealand. 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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1 Comments
  • J-P Hale 28/11/2016 9:52:08 a.m.
    On the whole the industry seems quite bi-polar in its approach and this creates all manner of misunderstanding and challenge for the retail consumer of insurance policies.

    Consumers do not understand the different approaches underwriting have for general insurance, life insurance, disability insurance, and travel insurance. They often look at it as all being much the same thing.

    Insurers tend to be very harsh when it comes to arranging cover when there has been some sign of mental health challenge in a consumers past. However, if there is unencumbered cover, my experience has been insurers take a very proactive approach to engaging the right answers and support for clients at claim time.

    It's this very black and white approach that confuses consumers. In the vein of how can they be so good at claim time when they are so harsh at underwriting. We need to find a happy medium to enable consumers to move and acquire coverage for mental health conditions where there has been some level of stress or depression history in their past.

    Many clients who have gone through a claim for mental health are often in a better place than when they first took cover, the situational issues and their responses to issues of life are often far superior after intervention than they were prior. This should be seen as an improved risk rather than an increased risk. In the same way that insurers now look at cholesterol and blood pressure for clients. It used to be medication for these conditions was loadings and exclusions across the board. Now it often is seen as standard or borderline risks and far less likely to have exclusions.

    Personally, I want to see a sustainable healthy insurance market and I understand mental health has a significant impact when it comes to income protection. A loaded approach rather than an exclusion approach needs to be considered where a client is able to demonstrate they have been compliant with their medical treatment for a mental health condition and this has resulted in an improved outcome and life experience, If this is applied in the window 3-5 years post recovery and treatment it could be workable.

    Yes in certain situations, this isn't going to work and will always come with an exclusion. However, for the majority of situations where it is a 1 off anxiety or depression event the current answers are far too tough.

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