1 June 2020
Scott Reid, Chair of the IFoA’s Health & Care Research sub-committee and member of the Health & Care Practice Board, blogs about our virtual round table on mental health.
During Mental Health Awareness Week we held a virtual round table with the aim of stimulating discussion about how actuaries and actuarial science can help inform public opinion and industry debate around mental health and insurance. The event was attended by experts in a range of topics including mental health, insurance and financial inclusion. Organisations represented included the ABI, Fair by Design, Chartered Insurance Institute, Cura Financial Services/Special Risks Bureau, and some well-known insurers (L&G and Unum).
The event was Co-Chaired by Kenny McIvor and Sumit Misra, both actuaries from the Life and Health & Care Practice areas. Support in organising and running this event was provided by IFoA Executive Staff, Faye Alessandrello (Policy Manager) and Katy Little (Policy and Public Affairs Assistant).
To set the scene, Chris O’Sullivan from the Mental Health Foundation (MHF) provided insight into the consumer perspective. Johnny Timpson from Scottish Widows, who is currently Cabinet Office Disability Champion for the Insurance Industry and Chairs the Access to Insurance Working Party, provided the industry perspective. In setting the scene Chris and Johnny highlighted that:
- It is estimated 1 in 6 adults experience a common mental disorder like depression or anxiety. The insurance industry must seek to remove barriers and to focus on meeting the needs of these customers.
- Mental health is also often associated with other issues e.g. financial stress and co-morbidities. When we consider underwriting and pricing mental health risks, do we understand the confounding effects from other factors?
- There has been progress made by the insurance industry to date, with some great examples of what some insurers have done to overcome some of the barriers, but there are still challenges to be overcome.
In the robust group discussion that followed a number of key themes emerged, including:
Theme 1 – Underwriting questions and how they are linked to actuarial risk
The industry has made good progress in recent years in trying to address some of the challenges around the underwriting process, however, there are still some considerable challenges which have impeded consumers who have experienced mental health conditions from purchasing insurance.
The suggestion from our discussion was the lack of transparency in underwriting decisions and pricing where cover is offered. It might be helpful for the insurance applicant to have more information to explain the link between the underwriting decision and the underlying risk. The perception from the customer perspective is that the underwriting decision isn’t transparent and if a premium is proposed it is much higher than expected.
Our panel’s expert view was that some questions were insensitive and often weren’t relevant to their condition. It is viewed as important to improve the underwriting questions we are asking and to ensure they are assessing actuarially relevant risks:
- Questions asked should be focused on gaining a deeper understanding of what is relevant to the risk e.g. suicidal thoughts against suicide attempts and the nature of these
- What risk factors are meaningful?
- The decision made should be clear and reasonable based on evidence and fact e.g. what is or is not uninsurable?
- Also, important to make sure these are reviewed regularly by the right people. Mental health is becoming more openly discussed and is rapidly changing.
Theme 2 – Empathy
The industry should consider how it engages with customers about their mental health. Conversations and questions need to be handled delicately and with empathy and discussion at the round table indicated this has not always been the case.
As an industry we ask consumers to engage with a system that may be very difficult for them to navigate, where there may be a lack of insurance solutions to meet their needs or, in some cases, they are excluded from entirely.
Signposting was also highlighted as a helpful way to direct customers to internal or external help that might assist them through the process.
Theme 3 – Transfer of the risk
There is an overarching theme of the transfer of the risk from the institution to the consumer. Products that seek to address these challenges should not be focused on fixing the consumer, rather they should look at where risks should be managed by institutions.
The example of Flood Re was provided and the question was raised as to whether a similar solution could be introduced for mental health or disability.
Next steps
The interactive round table discussion, with well-informed expert feedback, has helped focus our thoughts on the key challenges we should be addressing. We are keen to set up a new Working Party on Mental Health and my early initial thoughts on areas we should cover include:
- Understanding the relevance of underwriting questions and how they are linked to assessing the actuarial risks
- How to be more transparent in pricing and underwriting?
- Understanding correlations with mental health conditions and other conditions/issues such as financial distress. Could you use more accessible pieces of data to inform the insurer of the actuarial risk based on these other risk factors?
- Consider hierarchy of needs when looking at which solutions to offer e.g. short term income protection could be a better fit rather than a lump sum benefit to provide the appropriate cover and incentives to return to work which would be a better outcome for mental wellbeing
- Use of technology could also increase accessibility e.g. considering COVID-19, we are seeing more online medical solutions.
- How to enable more people with mental health conditions to be protected e.g. Flood Re for mental health where Government and insurers work jointly to protect more people at an affordable price.