SPONSORED CONTENT | At the third of four roundtables in a 2017 series to support best practice for mental health in the group insurance sector, 12 experts turned their minds to how to improve underwriting and claims handling.
Default group insurance via compulsory superannuation plays a vital role in Australian society, providing a base level of cover for most ordinary working people. One of the best things about group insurance is that it captures many people who would be excluded or priced out of individual policies due to pre-existing conditions.
More and more, consumers in the direct life insurance market are finding that a history of seeking treatment or support for their mental health either excludes them from cover or creates obstacles come claim time.
As such, group insurance has a more important role than ever in providing cover for super fund members experiencing mental illness. That is true across the spectrum from those with severe and chronic conditions, or families bereaved by suicide, to the estimated 1 in 2 Australians who experience anxiety or depression at some point in their lives.
While the system is far from perfect, there is a growing commitment among industry leaders to do better.
A recent roundtable hosted by Investment Magazine, with thanks to support from AIA Australia, examined how super funds and their insurers are working to improve their claims and underwriting processes to achieve better mental health outcomes for consumers.
The 12 participants included consumer and mental health advocates, alongside representatives from five of the biggest superannuation funds in the country, two of the largest superannuation industry peak bodies, and AIA Australia, the nation’s largest group insurance provider.
SuperFriend chief executive Margo Lydon highlighted the opportunity for the superannuation and insurance sector to step up for members.
“[From] underwriting time – using clear definitions and plain language – right through to how an individual is treated when the rubber hits the road at claim time,” Lydon said.
One source of complexity for consumers and their advocates is the inconsistency in the medical definitions used for eligibility across different funds and insurers. The Financial Services Council’s Life Insurance Working Group and the Insurance in Superannuation Industry Working Group are both looking into this.
AIA Australia head of group operations Derek Vine said there is “definitely scope” to consider the application of some more standard minimum definitions. All roundtable participants shared this sentiment.
By law, superannuation funds are required to include a basic level of group insurance cover in their default products. This includes a combination of death cover plus total and permanent disability (TPD) cover. Funds also may include income protection as a component of their default cover and some do.
One issue of hot debate in the industry at the moment is whether this standard combination of death and TPD cover needs to be reconsidered, or the definition of TPD recalibrated.
Australian Institute of Superannuation Trustees (AIST) senior policy manager David Haynes said rigid TPD definitions were stifling innovation.
“The fact that a disability has to be total and permanent for a person to get anything means it becomes a competition between the claimant and the insurer,” he said. “It creates a perverse situation where someone making a claim has to prove that they are totally and permanently disabled, which is in conflict with someone saying ‘I think I want to return to work’ and working with the insurer to achieve that,” he said.
“So, I think there needs to be a fundamental reappraisal…there actually needs to be law change.”
Sunsuper has responded to this issue by replacing standard TPD cover with a product called TPD Assist. Under this product, claimants typically receive incremental payments each year rather than a lump sum.
“If we can help with rehabilitation or some form of training that then enables people to get back to work in some capacity, then that’s a better outcome for everybody,” Sunsuper executive general manager, customer and technology, Teifi Whatley said.
She said the philosophy behind TPD Assist was informed by the belief that most people are better off if they can eventually be helped back into the workforce. “It’s very early days but we are definitely seeing some successes.”
SuperFriend’s Lydon said the traditional TPD model is particularly problematic for people unable to work due to mental illness, given most instances are episodic, rather than permanent.
“The design of TPD basically goes against what we’re actually wanting to achieve, and that is to get the person back to wellness,” she said.
Association of Superannuation Funds of Australia (ASFA) director of policy Fiona Galbraith agreed the traditional TPD model is “not a good fit” for mental health.
“It is certainly interesting to watch how some funds are taking an instalment approach…but having the definition changed to focus on rehabilitation and return to work would be a major step,” Galbraith said.
HESTA chief operating officer Stephen Reilly said that under the current rules including income protection as a component within group insurance was a good idea.
“We believe it’s better for the member to get back to wellness and get back to work, and it makes it better for the employer and for society,” Reilly said. “It’s not better for lawyers, no question about that. You’re not dealing with a percentage of a lump sum and I think that’s helpful. In the role of super as a safety net, we think it’s the best answer.”
AIST’s Haynes noted that any changes to standard underwriting practices in group insurance would need to be supported by good member communication strategies.
“Think about it from the consumer’s point of view…we need to sell the message that it isn’t a big con job,” he said. “This isn’t just about reducing financial impost of insurance, it’s actually about aligning the interest of members and insurers.”
Berrill & Watson principal John Berrill, an insurance lawyer, consumer advocate and long-time Superannuation Complaints Tribunal panel member, was generally supportive of allowing more flexibility for group insurers to make installment payments as an alternative to lump sums where appropriate. However, he would like to see these payments include a superannuation guarantee component so claimants are still accumulating retirement savings.
Learn from experience
Super fund executives around the table agreed that best practice underwriting reduced conflicts in the claims process.
MTAA Super insurance manager Mike Rowland said the fund has in recent years instituted a trustee committee to review every denied claim or application for additional cover.
Insights gleaned from this have led to the fund applying more scrutiny to the finer detail at the underwriting stage, particularly with regard to what might constitute a precluding pre-existing condition.
Simplifying paperwork and making communications easier can also make a big difference to members, especially those experiencing mental illness.
“You’ve got people who are absolutely at their most vulnerable and you’re asking them to fill out a very complicated form,” HESTA’s Reilly said. “They’re emotionally distressed and you’re asking them to explain rationally what happened a year ago, two years ago, 10 years ago. We are working very hard to simplify that process to make it easier for members and their families, who, don’t forget, are often the ones filling out forms.”
Lydon said investing in better training for frontline staff was one simple way some super funds are improving the claims experience for all members, but particularly those experiencing mental illness.
“The uptick in staff training conversations with members with empathy, not only the technical capability but the human capability, I think is a tremendous step forward,” she said.
IOOF product manager, insurance, Michelle Voudouris said the introduction of a ‘tele-claims’ initiative was “definitely the best thing” the superannuation and wealth-management firm has done to reduce mental stress for claimants. IOOF clients can now complete a TPD claim over the phone with the help of a specially trained claims officer, without having to fill out any forms or sign any documents.
It is just one example of how technology can help the industry improve the customer experience for people in the claims process.
Reform rehab rules
AIA Australia is working on how artificial intelligence can be applied to make the claims process quicker and more consistent. Experiments with IBM’s Watson have shown promising results. Vine is optimistic that the use of AI to automate basic administrative tasks will improve efficiency, creating more time for staff to spend on human interactions with clients.
“It’s not a silver bullet, but we are using technology as an enabler and hopefully it can help us trigger the conversations needed to get people the right help earlier.”
There was fervent agreement among all those at the roundtable that early intervention and access to rehabilitation improves outcomes. While insurers can fund some elements of occupational rehabilitation, it was a source of frustration for many that the law currently does not allow for group insurers to fund rehabilitation that would affect access to targeted early intervention and medical expenses to facilitate recovery and return to work.
AIA Australia national rehabilitation manager Joanne Graves said this needs to change.
“I’m a very passionate advocate for the difference rehabilitation can make in the lives of people on claim,” Graves said.
Cbus Super general manager, insurance and complaints, Noel Lacey said it was “just a disgrace” that group insurance was precluded from funding rehabilitation services.
ASFA’s Galbraith said changing this would be a “common sense” reform.
There was also unanimous agreement on the need for more multi-sector collaboration – encompassing the legal fraternity, the medical profession, mental health groups and employers.
Mental Health Australia director, policy and projects, Josh Fear noted that the dialogue between the mental health and insurance sectors has already improved markedly over the last five years.
“We’ve gone from something antagonistic – or maybe not even a dialogue – to now we’re working together with the industry to deal with some very complex issues that don’t lend themselves to easy answers,” Fear said.
Vine said the prevalence of mental illness in the community made working together a priority.
“One in two Australians are going to experience mental health issues in their lifetime,” Vine said. “As an insurer, the days of providing pure financial protection are long gone. We have obligations that go way beyond that. Our obligations are to help make a difference in Australia.”
This article is based on an Investment Magazine roundtable, sponsored by AIA Australia.