Allowing life insurers to fund mental health treatment is not the solution to Australia’s mental health crisis, according to law firm Slater & Gordon.
If life insurers were able to dictate and deliver treatment rather than paying disability income, this would help insurers to manage the increase in claims.
Slater and Gordon state practice group leader Sarah Snowden said the idea had already been suggested in the Parliamentary Joint Committee on Corporations and Financial Services in 2018 but it had been decided it would lead to poor outcomes and concerns over how it would be administered.
She said: “Insurers aim to maximise profits. If a person’s claim is only worth $1000 per month and the cost of treatment is comparable to the benefit being paid, it will not be profitable for insurers to rehabilitate the person. It is likely they would only agree to assisting people with treatment when it is financially beneficial for them to do so. This is an unresolvable conflict of interest for insurers to be making decisions about rehabilitation and treatment.
“The underlying concerns raised in 2018 have not changed and the industry is only reacting to the current COVID-19 crisis. In reality, people would not be paid until they had received the treatment prescribed by the life insurer.
“There is a very good reason that the Health Insurance Act prohibits life insurers from dabbling in the provision of health services. It also raises serious questions around ethics and impartiality in circumstances where claims are rejected and disputed. It puts the claimant in a position of disproportionate disadvantage.
“These are often people who have been paying premiums for years and they are entitled to receive their benefits when they have a genuine claim that should be accepted. Having insurers funding treatment for mental health conditions would set a very dangerous precedent. It is a very slippery slope from there into prescribing appropriate treatment for claimants with other medical conditions where a ‘high’ portion of the claims are made.”