Battling prejudice in mental health policies

Of the $11.0 billion spent nationally in 2019–20, state and territory governments spent 60.0 per cent ($6.6 billion), the Australian Government 34.7 per cent ($3.8 billion), and private health insurance funds and other third-party insurers 5.3 per cent ($584 million). These proportions have remained relatively stable over time, with 60.4 per cent of national spending coming from state and territory governments, 34.4 per cent from the Australian Government, and 5.2 per cent from private health insurance funds and other insurers in 2015–16.

Government spending on mental health-related services in 2019–20 was estimated to be around 7.6 per cent of total government health expenditure

Government spending on mental health-related services in 2019–20 was estimated to be around 7.6 per cent of total government health expenditure, in line with 2015–16 (7.6 per cent) and up from 7.3 per cent in 1992–93 when data collection began.

Spending by the Australian Government for mental health-related services (adjusted for inflation) has increased by an average annual rate of 3.2 per cent over the period 2015–16 to 2019–20, while spending by state and territory governments increased by an average annual rate of 2.8 per cent.

Southern Cross Travel Insurance has conducted its own survey, and their figures suggest that 84 per cent of New Zealanders say mental health is one of their top 10 concerns. This has influenced the insurance company’s thinking.

“With more information than ever before about mental health, we believe there is no longer a justification for having a blanket mental health exclusion under travel insurance policies,” says Jo McCauley, Southern Cross Travel Insurance’s CEO.

As a result, Southern Cross has removed blanket mental health exclusions from all but one of their policies, Visiting New Zealand. Later this year, they will be reviewing this policy and intend to apply a consistent approach across all their policies.

It’s important that customers and potential clients understand the terms and conditions as many insurance policies do not cover pre-existing conditions. McCauley explains: “Under our International Comprehensive travel insurance policy, we cover new mental health conditions that appear unexpectedly during the period of insurance, just as we would any other new medical condition.”

Helping customers feel comfortable about talking about their mental health is vital. It’s a very delicate area and insurers need to talk through the medical screening questions with tact and sensitivity.

Where the customer seeks to buy cover for a pre-existing mental health condition during the sales or quote journey, the insurer should ask clear, specific, and relevant questions about the customer’s mental health, so the insurer forms a clear understanding about the cover the customer requires and can accurately price the risk of providing that cover.

With Southern Cross’s International Comprehensive travel insurance policy, customers can apply to cover pre-existing conditions, including those related to mental health. They can then choose to cover those conditions or not. If they do, they may pay an additional premium.

Insurers hold data regarding very sensitive information about their customers. In applying for mental health cover, clients need to share intimate medical details about their psychological, physical and mental wellbeing. Insurers need to improve on this area, as studies have shown that travel insurance companies are not viewed as conducting the process in an empathetic and sensitive way.

Consumers may feel humiliated or embarrassed by insurersʼ matter-of-fact, verbatim way of asking questions about, for instance, suicide. This potentially uncomfortable exchange can be turned around by creating a good place to start building the emotional connection necessary for insurers to be trusted as a more active stakeholder in customers staying well.

Mental health issues are a much more talked about condition, and also taken more seriously, as the data shows. In 2019, one in every eight people, or 970 million people, around the world, were living with some form of mental disorder with anxiety, and depression is the most common. The number of people living with an anxiety and depressive disorder rose significantly because of Covid-19. It shows a 28 per cent increase for anxiety and major depressive disorder.

As more scientific and medical data becomes available relating to mental health conditions and how to treat them effectively, actuaries can use that data to accurately price the risk to the insurer of providing cover for mental health conditions.

Actuaries can use that data to accurately price the risk to the insurer of providing cover for mental health conditions

Not all mental health conditions are the same in terms of severity, duration, and treatment. With more information, actuaries are now able to develop risk profiles and price them with reasonable accuracy.

As with other severe medical conditions, some severe mental health conditions may have a risk profile that is beyond a particular insurer’s appetite to insure. In those instances, insurers can help customers by providing clear reasons for refusing to offer cover.

The main area where Southern Cross has seen an increase in mental-health related claims is with their International Student policy (travel insurance is required by Australian and New Zealand governments for all international students). Comparing their data from 2019 with 2022, the growth in student claims is understandable, say the insurance company, given the disruption and uncertainty students experienced through the pandemic.

“They were vulnerable, in a foreign country where English may not have been their first language. The lockdowns were extensive as the pandemic escalated and their families were facing similar challenges thousands of kilometres away,” says McCauley. “Southern Cross was pleased to support our International Student customers at this trying time with their mental health needs.”

Since a landmark court case seven years ago, much has been done to re-evaluate insurance policies involving mental health issues. In 2015, Melbourne-based Ella Ingram was awarded compensation because her insurer, QBE, decided not to cover her for a bout of depression that forced her to cancel an overseas school trip. Ingham’s travel insurance did not cover trip cancellation due to mental illness, even if the mental illness is not a pre-existing condition.

Ingham took them to court and her claim was upheld, with the case attracting the attention of the Victorian Equal Opportunity and Human Rights Commission (VEOHRC), which launched an investigation into travel insurance companies. One of the key findings of the report was that a blanket exclusion for mental health conditions is in breach of anti-discrimination laws.

The Insurance Council of Australia said it had been working alongside its members to improve mental health-related coverage and outcomes for customers

The Insurance Council of Australia (ICA) said it had been working alongside its members to improve mental health-related coverage and outcomes for customers.

“Travel insurers responsible for most of the market had either removed exemptions or were intending to do so before this inquiry was instigated in 2017.

“This trend has continued and soon insurers with more than 80 per cent share of the travel insurance market will have removed blanket exclusions for mental health conditions, with cover also widely available for first-instance episodes of mental health conditions.

“Many insurers cover pre-existing mental health conditions on an individually underwritten basis similar to coverage available for pre-existing medical conditions.”

The insurers who were part of the report had already removed, or taken steps to remove the blanket mental health exclusions from their travel insurance policies. Furthermore, they also agreed to work on the VEOHRC’s recommendations, including the way they offer pre-existing mental health conditions.

Following the investigation into mental health discrimination by travel insurers, the Commission entered into an agreement with nib Travel (parent company of World Nomads Group) regarding the removal of travel insurance products that included discriminatory clauses. “Since this agreement was executed, nib Travel has now removed the clauses from its products and have accordingly met all requirements of the agreement, the Commission stated.

nib Travel also said in a statement that travellers with mental health conditions, new and pre-existing "may be covered for policy benefits".

Suncorp also had a rethink as a result of the inquiry, saying it had already removed its policies relating to mental health exclusions from its policies. “We accept that, at the time, our policies did not comply with the Victorian legislation and community expectations,” the company said in a statement.

QBE, who lost the case against Ingham, removed mental health exclusions by the time of the investigation and sold out of the travel insurance business to nib Travel for $24.2 million in 2019.

Since the court case, insurers have amended their mental health policies, although some industry experts believe more needs to be done. “There are some insurers in the market offering some benefits of treatments of mental health issues for health insurance policies,” said Kim Yan Lim, Verisk Risk Rating’s Sales Director, speaking at ITIC Asia in 2022. “But these are often inadequate for travel policies.”

Some Australian insurers are now using Verisk’s Risk Rating Tool to enhance its ability to offer cover to people with mental health conditions

Some Australian insurers are now using Verisk’s Risk Rating Tool to enhance its ability to offer cover to people with mental health conditions. “Pre-existing mental health conditions such as depression or anxiety,” Kim told attendees, “can be approached in the same way as physical health conditions like diabetes and high blood pressure.”

According to a Swiss Re Institute research report, Head first: Supporting Consumers’ Mental Wellbeing Through Insurance, a segment of 45 million consumers across six markets view a future negative mental health event as being highly disruptive and see value in an insurance product covering mental wellbeing.

In response to the findings, Swiss Re partnered up with mental health platform, Wysa, to create an insurance-specific app which helps consumers track their mental wellbeing and improve links to insurers’ existing support networks, such as therapy providers or Employee Assistance Programmes, which will enable an earlier intervention in the claims journey. Potential pilot markets include Australia and New Zealand.

“The insurance industry is striving to better understand and prevent mental illness,” Jolee Crosby, Swiss Re's Head of L&H Global Core Solutions, Underwriting & MedRe, said. “Wysa will support insurers in their goal of improving both their products and the consumer experience for those looking to stay on top of their mental wellbeing.”

With financial backing from Google and other investors, Wysa's app has an AI-guided listening and self-management mental wellbeing support modules for depression, stress, and anxiety, which are of most concern for consumers, and where most disability claims arise.

The app includes improved monitoring/mental health tracking, curated pathways to signpost consumers to relevant offline support and better reporting for insurance clients. This is designed to enable ‘pre-notification of claims’ by encouraging policyholders to seek support – through proven techniques in existing insurer ecosystems – before issues become too extreme. Providing improved support opens the opportunity for insurers to make claims savings and increase consumer engagement – especially for disability products.

Ramakant Vempati, Co-Founder and President of Wysa explains: “We are convinced that, based on our existing capabilities and the app’s new components, we are building a unique solution together that integrates scalable, AI-enabled responsive early-stage mental health support into the insurance industry.”

As the global population attempts to move on from the pandemic, one of its longest-lasting legacies is going to be on people’s mental wellbeing

As the global population attempts to move on from the pandemic, one of its longest-lasting legacies is going to be on people’s mental wellbeing, so it is vital that insurers are able to respond to the need for travel insurance for their existing and potential clients, not just to comply with regulatory requirements.

Insurers have a responsibility to respond to customers in a more emotionally astute way by using data already available to answer certain questions, or making sure staff that work on mental health lines have specific training on empathy or behaviour.