Life insurers not a solution to mental health crisis

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.

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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.”

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For once the union aligned ambulance chasers at Slater & Gordon have got it right. Insurers should not be involved in mental health treatment. Insurers should not be covering mental health at all. Mental health claims are far too easy for claimants to fake, and far too difficult for insurers to decline due to the emotional blackmailing of the mental health lobby.

The cost of mental health claims is being borne by skyrocketing IP and TPD premiums, making those products unsustainable to insure the broad range of disabilities for which they are intended. Mental health insurance is a classic example of market failure. It therefore needs to be removed from private insurance altogether, and managed by the government.

I find it difficult to follow the logic here. Government or private, all insurers have to manage claims. It does not make sense to have two separate insurers managing the same condition: one paying for treatment, the other paying for lost earnings. It is a particular problem if the health insurer has annual limits on claims. It is outrageous that life insurers should not be permitted to pay for treatment that would help people get back to work. In my view, it one of them should take it upon themselves to start paying for treatment and see what the courts would think of interpretations of a law that prohibits paying for such treatment.

Any value in this article is eliminated by Slater & Gordon not declaring their own conflict in relation to the issue.

For once I agree with the Lawyers. The insurers job is to pay the claims simple and not be involved treatment in any way. If the insurers have an issue with paying on mental health they will have to fix this on new policies going forward. Existing policy holders are and should remain to be covered for mental health claims. The insurers are quite happy to take the premiums and in addition increase premiums across the board to cover claims increases.
Outside of mental health claims insurers have had the option to advance payments for specific treatment when the client has requested this and agreed to it. What the FSC / insurers are trying to do is to give themselves the right to avoid claims by offering the cheaper option for themselves and this should never be allowed.

They are already getting involved in claim treatment, I have had two recent claims and the insurance company called the clients doctor directly to suggest an OTs and other treatments....and we had to go in and stop them from talking about a clients medical treatment without the client present .

I think a more suitable solution is to cap mental health claims to 12 month or get rid of them altogether. All the insurance companies got rid of lifetime income protection policies...

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