Life insurers’ mental health action plan gets green light

A new life insurance industry action plan and assessment framework designed to better address mental health claims has commenced development by the Council of Australian Life Insurers (CALI).

The framework is intended to bridge the gaps between current disability insurance cover and the emerging medical evidence, as well as improve the long-term affordability, sustainability, fairness and transparency of insurance cover for customers.

To be developed over the next 12 months in consultation with key stakeholders across industry and medicine, the plan follows several months of advocacy led by the association after several data and research releases confirmed mental health had quickly become one of the top reasons behind total and permanent disability (TPD) claims among young Australians.

“We have listened to feedback from customers and consumer advocates who feel the claims process can be more transparent and easier to understand,” CALI chief executive, Christine Cupitt, said.

“Our goal is to ensure an experience that is fair, transparent, and consistent for every Australian, no matter which insurer a customer turns to.

“Australia is in the middle of a national mental health crisis, and we need to set clear, evidence-based guidance about the support life insurers provide.

“Insurers will always be there to help Australians with severe conditions that prevent them from working, but like the NDIS or workers’ compensation schemes, we can’t be the answer for every case.”

Further research cited by CALI found younger Australians were among the worst affected cohorts, with approximately 60 per cent at risk of or experiencing burnout and 25 per cent reporting “severe psychological distress”.

As a result, a group of medical practitioners, legal specialists, ‘return-to-work’ experts, life insurance professionals and individuals with lived experience will form part of an expert panel to deliver “technical advice on the framework” and engage with consumer representatives, mental health advocates, superannuation trustees and financial advisers as part of a three-month consultation period beginning next year.

CALI confirmed the framework is being developed alongside the ongoing independent review of the Life Insurance Code of Practice (Life Code) helmed by Peter Kell, with a public consultation paper due for release on 18 October and to finish up on 30 June next year. The framework will also be guided by the outcome of the Life Code review.

“Together, the Life Code review and the development of a new disability assessment framework will strengthen how Australians are supported when facing mental health challenges and give Australians confidence that life insurance will be there when they need it most,” Cupitt said.

According to the association, the action plan will:

• provide clarity and transparency to customers by creating a framework that will establish minimum standards for consistent, evidence-based thresholds to better assess mental health claims against;
• align where possible, industry guidance and approaches on disability insurance to other income support systems in Australia;
• clarify the purpose of disability insurance and better reflect contemporary medical evidence and return to work outcomes;
• set industry principles on disability insurance that can help achieve genuine indemnification for financial loss of customers; and
• maintain stakeholder support by acting fairly and transparently.