Financial specialists say insurers were unprepared for the growth and rising awareness of mental health issues in recent years, and consumers are paying the price through higher premiums and tougher rules.
Support service beyondblue says about one million Australians suffer depression and two million suffer anxiety, while data from insurers shows that mental health has become the equal-largest claims payout for income protection insurance policies.
Insurance comparison website iSelect has seen an increase in claims related to conditions such as depression, anxiety, fatigue, or drug and alcohol addictions.
Spokeswoman Laura Crowden said it was good news that there was less of a stigma around mental health and that more people were seeking treatment and making claims, but negative forces such as longer working hours and financial pressures were increasing stress.
“Recent years have also seen a big increase in the number of women with income protection insurance, and females are more likely to claim for mental health conditions,” she said.
Life insurance giant TAL said it paid out $185 million in mental health claims last year — second only to cancer in terms of total life insurance payouts.
Separate insurance company data shows that for income protection — where most depression and anxiety claims surface — mental health related payouts are running neck and neck with accidents and injury, and are twice as high as cancer payouts.
A TAL spokesman said people with mental health issues were spending more time out of work. “Within income protection and mental health claims in particular, we’ve seen the duration of claims increase over the years which has resulted in greater total payouts,” he said.
JBS Financial Strategists CEO Jenny Brown said the claims trend was likely to continue. “The population is a lot more aware of mental health and to seek advice earlier rather than later,” she said.
Ms Brown said modern workers rarely switched off because their job followed them home on their phones and other devices. “If someone isn’t capable of doing their job because of stress, once upon a time would leave and get another job. Now they tend to push through or make an insurance claim,” she said.
Certified financial planner Patrick Canion said pressure had built over time because insurers “had a guess” 10-20 years ago about how many mental health claims they were likely to pay out.
“They haven’t got it right, but because they guaranteed the benefit they have to honour the claims.”
“They are taking such a hit from their income protection book that they have to find ways of making up for it, and increase everything across the board.”
Mr Canion said unlike many injuries or illnesses, mental health issues could resurface years later. This meant that insurers were now excluding mental health cover for anyone with even a hint of anxiety issues previously in their lives.
This piece by was originally published on ‘News.com.au’ March 25, 2017.