We republish an informative article in Cover Magazine where John Downes, underwriting & claims director for VitalityLife, investigates the challenges around underwriting those with a history of poor mental health.
John Downes is underwriting & claims director for VitalityLife
When it comes to mental health, insurers are often known for their lack of sensitivity. The underwriting process can exhibit prejudice towards those with a past experience of a mental health condition of any level. They overstate the risks and focus on, for example, the potential for suicide, regardless of how preposterous a notion this may be for the vast majority.
As an industry, we all need to accept the criticisms levelled against us and find ways to improve customer outcomes. Yet, at the same time, we also need to investigate the root cause. A lot of great initiatives have been put in place in recent years to help ensure that more people get access to the help they need and based on our straight through processing rates for mental health disclosures, accessibility – for life cover at least – looks good. So, where next? It’s time for us to all shine a light on exactly where the problem areas are: which kind of cover is proving inaccessible; for what types of mental health disclosures; and how is the industry communicating the risks.
In this column, I’ve tried to openly share some of the underwriting challenges that all insurers are facing. And how, by working as a collective, we’re putting in place an infrastructure to ensure that many more people have access to the protection they need.
As part of the Association of British Insurer’s (ABI) Mental Health Working Party, Vitality, together with many other insurers, are starting to do this, and through the ABI will announce its mental health standards.
A question of definition
Prevalence of poor mental health in modern society is an issue we are all now rightly familiar with, and much more open about. But ‘mental health’ can often be used as a catch all term for a range of different disorders, from anxiety, through to psychotic (such as schizophrenia) and affective (such as bipolar disorder).
According to the National Institute for Health and Care Excellence (NICE), common mental health problems include: depression; generalised anxiety disorder (GAD); social anxiety disorder; panic disorder; obsessive compulsive disorder (OCD); body dysmorphic disorder; and post-traumatic stress disorder.
The Mental Health Foundation’s Fundamental Facts about Mental Health 2016 (the most recent study of its kind) found in the UK there were 8.2 million cases of anxiety disorder, more than one million cases of addiction and almost four million cases of mood disorders, including bipolar disorder.
Bearing the above in mind, is it right to call all mental health conditions ‘illnesses’? Perhaps this is the area where underwriters need to focus first and, arguably, the same could be said for society as a whole. Mental health conditions are differing and nuanced, and each require tailored medical treatments. Underwriters should approach their customer’s individual cover this way.
It’s important to bear in mind that insurers need the ability to assess risk – from recurrence, to the impact on physical health or the potential for non-physical problems (i.e. substance abuse, employment or relationship difficulties).
As part of this, we have to determine in a collective manner how individuals respond to these potential risks. For example, can we assess health and lifestyle factors and/or treatment programmes to determine whether individuals are doing what they can to prevent or control the symptoms?
This represents the traditional underwriting process for physical health conditions. It is this very same underwriting process that is applied to mental health conditions. But should the process differ between mental and physical health conditions? Is singling out mental health issues as being ‘special’ defeating the object of diversity and inclusion?
On the other hand, if the consensus of opinion is that they should differ, what exactly does that look like? Should insurers refer more cases out for manual underwriting? What about the costs involved when you consider that around 60% to 70% of mental illness disclosures at Vitality, for example, result in a straight through (i.e. non-manually underwritten) decision?
It’s much harder to assess risk for disability insurance purposes for mental health than it is for physical health, a broken leg or a slipped disc are good examples of this. Depending on the seriousness of the condition and the individual, some will just keep going regardless, others will stop working for a period of time. It’s difficult or even impossible to assess this aspect. What insurers can assess with some accuracy though is the length of time it will take to recover.
Now compare this with a mental health condition. Take two people suffering from stress. Again, one might just keep going, the other might quit work for a while. So far, the same as the physical example above. The difference lies in the fact that insurers cannot say with any confidence at the moment the cause of their stress, the severity, and how it may affect a customer’s life and health in the longer term.
While we have the same process for both physical and mental health conditions at present – and whilst having something completely different could fly in the face of inclusivity – perhaps there’s an argument here for adapting that process for mental health.
Past vs future
Probably the biggest area of contention when it comes to mental health issues and underwriting is the fact that historic problems can occasionally lead to premium loadings and exclusions. At the very worst, it can render the individual uninsurable.
Should the past be an indication of the future when it comes to mental health? Sometimes yes, sometimes no. Again, there’s no difference here to physical health conditions.
However, more can be done to improve access to insurance by not just looking at the condition – whether physical, mental or both – but at how individuals react and respond to the care they receive.
Where stress and anxiety are concerned, lots of different factors can affect an individual’s recovery. Initial diagnosis, access to treatment and support, coupled with their own personal resilience will shape their journey. Some get back on track quickly, others don’t. As an insurer, it’s difficult to assess with complete accuracy which way it will go.
Although this does of course remain largely the same for many physical conditions too.
For example, access to insurance for diabetics used to be a convoluted process. In recent years though, the speed from application to cover for diabetes has increased considerably across the industry and the evidence needed to determine rates has improved.
The premium levels depend heavily on controlling the illness through patient behaviour and the monitoring of lifestyle choices. For example, we would monitor a member’s Hba1c readings as one of the four health factors to determine premium rates.
Could we do something similar for mental health conditions? With growing awareness of mental health management, perhaps in the future individuals may be able to evidence their management of a condition, ending penal outcomes or automatic denial.
So, where does all of this leave us? The underwriting process can be improved. Life underwriting does allow for a more accurate science than income protection underwriting at the moment. But, even with life, as an industry we need to consider adapting the process to reflect the fact that mental health issues are not all ‘illnesses’, rather they exist on a spectrum.
As for disability underwriting, the process clearly needs to be adapted to allow more people to get the cover they need. In order to achieve this, we need the ability to measure resilience.
Perhaps it would also help if insurers were to communicate why claims for a seemingly similar mental health issue result in a different outcome for different individuals. This might be particularly useful where claims result from what would appear at first glance to be ‘trivial’ conditions.
Does the industry need to be more honest in this way about mental health risks? Have we failed to communicate the risks into everyday language? These present big opportunities for change to achieve better consumer outcomes.
You can read the original article in Cover here.