In April, the World Heath Organisation used World Health Day to highlight the stigma still attached to mental illness. Its figures show depression will soon become the second most common cause of disability after heart disease – a frightening statistic for income protection (IP), private medical insurance (PMI) and critical illness (CI) insurers.
The total number of people in the UK affected by mental disorders has always been understated. Many sufferers conceal the fact from their employer. Admitting to anxiety or depression is a sure way to blight your career, despite the fact that disability discrimination has been made illegal.
But as more people do admit to being affected, the figures present a distinct underwriting challenge to insurers. IP is particularly exposed to claims for mental illness. Norwich Union Healthcare (NUH) reckons that it accounts for one-third of all IP claims. Even worse, NUH’s product marketing manager, Nick Homer, says: “Even when a claim is made for non-psychiatric reasons, it is not uncommon for someone who is off work for a long time to sink into depression. Mental conditions could be an underlying cause in an extra 20 per cent of claims.”
This has caused insurers to tighten up the questions on their proposal forms. Stress or depression used to be hidden in a generic mental health question, but there are now specific questions relating to anxiety, stress, tension, depression, insomnia and mental illness.
Sometimes, a history of mental problems is handled by excluding this type of claim from cover. However, NUH prefers to rate up proposers according to how many episodes they have suffered and whether they are receiving ongoing treatment. Homer says: “The terminology used around disability changes over time, and certain exclusions might not serve the purpose for which they were introduced.”
Where depression has been reactive, for example, post-natal or post-bereavement, there may not be a recurrence. But if someone had started taking Prozac six months ago, it would set alarm bells ringing in underwriters’ ears. “Anyone in receipt of ongoing treatment would automatically be declined,” Homer warns.
Legal & General’s chief underwriter Russ Whitworth says the company would call for a private medical attendant’s report for proposers with a history of depression. “We would increase rates for endogenous depression, and in a minority of cases, we could exclude mental illness. There is a risk of suicide as well as being off work,” he says.
Other insurers, such as Standard Life Healthcare, prefer the moratorium system. This means that any condition that had affected the proposer in the last five years would not be covered until two symptom-free years have elapsed since the policy was taken out.
Managing mental illness claims is very tricky. If the claimant has clinical depression or a personality disorder, validating the claim should not present a problem. But, where anxiety, ME or vague symptoms of being unwell are concerned, it becomes much more difficult. The claimant will probably not have seen a specialist but only their GP.
The Health Claims Bureau comments in its Mental Illness paper: “Often the claimant’s doctor will prescribe a mild medication which will alleviate the symptoms to a degree. The doctor could be satisfied that as long as the patient is feeling reasonably well and the family is not distressed, the treatment is working. Getting the patient back to work is not necessarily on the doctor’s agenda.”
Rehabilitation is therefore up to the insurer. As with other IP claims, early intervention produces the best results. Where cover is under a group plan, the employer should be encouraged to give notification one month after commencement of disability, even if there is a six-month deferred period. Otherwise, the claim could easily become permanent.
IP insurers frequently use claims counsellors to visit the claimant and assess the chances of a return to work. But counsellors have to tread very warily with mental cases. An unannounced visit invariably does more harm than good.
Sometimes, discussion with the employer is more useful. The claimant may have been over-promoted, demoted, or simply be stressed out through overwork. In the case of personality clashes, a change to a different department may be indicated. Where the claimant cannot ever face going back to the same employer, help in retraining for a different career may be needed.
Where the prognosis is doubtful, it is important for claimants to see a psychiatrist. Five-minute appointments with the claimant’s GP are unlikely to produce anything more than a repeat prescription. The most difficult thing for insurers is to know whether the claimant is shamming and has in reality become fit enough to return to work. A part-time return, starting any day except Monday, may be the way to ease them back.
In some cases, after exhausting all the possibilities, insurers may consider terminating the claim. The Health Claims Bureau’s paper concludes: “In the face of reluctance to return to work, it should be pointed out to the claimant that the policy covers sickness, and not the inability to find a suitable job. If an individual is outwardly psychiatrically well with no ongoing medication or therapy, there is no justification for the insurer to continue claim payments.
“The insurer will not continue the claim until such time that a person considers themselves 101 per cent well, but to the level of normality they experienced before the disorder got out of control and prevented them from working.”
PMI is not designed for mental conditions, its basic purpose being to cut waiting times for surgery. Budget plans such as PPP’s Perfect Sense exclude psychiatric illness altogether. But comprehensive plans provide a certain amount of cover. For example, Standard Life Healthcare’s Primecare contract gives up to 28 days’ inpatient and £1,200 of outpatient cover a year.
Under Bupa’s new Heartbeat policy, mental conditions are underwritten and priced accordingly. Under the popular BupaCare contract, any mental condition disclosed by the proposer will be either excluded, or a restriction placed on cover.
If there is no history of previous conditions, policyholders become covered for psychiatric conditions after a two-year deferred period. This applies to both personal and small group contracts.
However, once on cover, Bupa is more generous than most of its competitors. Most PMI insurers exclude addiction, substance misuse, chemical dependency and self-harm. Unfortunately, alcoholism and self-harm are only too frequently associated with mental illness. Bupa, however, does not have any such exclusions.
But Bupa will not pay for chronic conditions or ones that become recurrent. For major psychiatric illness, only two admissions are allowed. On the third strike, you’re out.
Turning finally to CI cover, the only section where mental illness claims arise is the total permanent disability section (TPD). However, TPD means just that: total and permanent inability to do your own job. So payouts are much less frequent than under IP, which also covers intermittent episodes and often cuts in after a deferred period of only four weeks.
CI underwriters are, therefore, not so bothered about previous history. Two weeks off work with depression would not put them off. It would have to be a long period in a mental hospital or a diagnosis of schizophrenia, in which case they would exclude TPD altogether.
Insurers are quite right to be wary of mental conditions. If a person has a hip replacement, the insurer knows what it will cost and how long recuperation will take. With mental illness, claims are open ended. Even prisoners know how long their sentence is, and get remission for good behaviour. Such certainty is, alas, not afforded to the mentally ill.
However, employers’ liability insurers have even more cause for concern about mental illness than their health insurance colleagues. They could be in for a big hit with stress claims. Legal expenses, and directors and officers insurers, should also watch out.
The Disability Discrimination Act does not seem to have impinged on mental health yet. But it will. Employers will have to take as much care of their employees’ mental health as their physical wellbeing.
Those who permit a culture of bullying, excessive working hours, or disdain for staff with mental problems, will be in big trouble.
However, there will be a silver lining for group PMI providers. Firms will need help in implementing holistic absence management programmes. They will need health screening, health audits, confidential stress counselling – and much more. This will become a major growth area, as the trend spreads to small group PMI schemes as well as large ones.