Insurance reform more urgent, not less, in the light of lockdown mental health distress |

Insurance reform more urgent, not less, in the light of lockdown mental health distress |

Insurance reform more urgent, not less, in the light of lockdown mental health distress | Stuff.co.nz

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Noticing changes in your own mental health is the first step to preventing a slide into more serious issues, writes Alison Mau.

Alistair Hughes

Noticing changes in your own mental health is the first step to preventing a slide into more serious issues, writes Alison Mau.

 

OPINION: In an appropriate move for the times, a week ago the folks at Oxford English Dictionary announced “vax” was their word of the year for 2021.

If you can get over the fact it’s an abbreviation, not an actual word (grammar pedants take care), vax is a fine enough choice – it’s certainly carrying a tonne of cultural weight right now. But it’s not very imaginative, is it? Of all the new words and concepts this pandemic has thrown up in the short space of a year and a half, I would have chosen “languishing”.

If you haven’t caught that one yet, it’s a term for the mental health phenomenon characterised by an ongoing case of the blahs. It’s not burnout, it’s not clinical depression – it’s apathy, restlessness, lack of joy.

Noticing changes in your own mental health is the first step to preventing a slide into more serious issues, of course, but accessing care is expensive. Counselling costs hundreds, and even if you’re fully insured, it’s not something you can generally claim for.

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This week my insurance broker sent out an email letting clients know my insurer (nib) has a new offering on mental health – $2500 a year for appointments for clinical psychologist or psychiatrist fees.

 

It’s the second company to do so (Southern Cross offers cover capped at $750 per annum) and you could argue that it’s still a drop in the bucket when compared with your likely ongoing costs of treatment.

I don’t qualify for the offer because I’ve been insured with nib for too long; this new initiative is a special offer, for newer customers.

My broker from Spratt’s, Allan Mearns, describes it as a good start, and something that might be rolled out more widely if it works well. Not a gimmick, but a testing of the waters.

Mental health and insurance is a massively thorny issue – one that’s been hanging around without much action for decades, with reform first called for back in the 1990s.

 

Insurance lawyer Tim Gunn.

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Insurance lawyer Tim Gunn.

I spoke to insurance law specialist Tim Gunn, who says mental health is an outlier in the insurance field; he sees cases where people are unfairly stigmatised and treated by insurance companies for anything that is not straightforward.

“They like a broken leg, where there is a start and a finish to your treatment,” he told me.

“If you are depressed, that’s a very subjective thing, there’s no nice x-ray showing the break. They don’t like how ‘woolly’ mental health can be.”

Tim describes cases he’s seen where clients claiming for heart attacks or cancer treatment have been declined – or their policies cancelled altogether – because they didn’t think to tell the insurer about that mild bout of post-natal depression they experienced a decade ago, for example.

Under the current law the insurers are acting perfectly legally when they do so. They have exemptions to the current consumer and contracts law and they use them because they couldn’t feasibly run their businesses if those exemptions didn’t exist.

But this concept of “innocent non-disclosure” (as opposed to deliberately hiding parts of your medical history) is a sticking point, and one of the main reforms insurance lawyers have been pushing for over the past decade at least.

In 2018, things were looking promising, with then-Minister of Commerce and Consumer Affairs Kris Faafoi ordering a review, resulting in public and industry consultation, followed by an impact statement in 2019 proposing law change.

The current law asks consumers for “all material information that would influence the judgment of a prudent insurer in setting the premium or deciding whether to insure”. But as the minister said in his impact statement, how does a consumer know what the insurer would find “material” – and the consequences are harsh.

He also found New Zealand is lagging behind the likes of the UK and Australia, who’ve already made reforms to create a fairer playing field. Discussion papers on a draft bill were due to be released for consultation in the current quarter – lawyers, customers and the insurance sector are still waiting.

Not everyone agrees legislative change is the way to go. Mearns, who is Spratt’s Head of Practice, says law changes tend to make insurance providers more cautious every time they’re enacted. If the new laws mean more information must be gathered to process a claim, then the system suffers.

“Every time they change the system it clogs the system, and a clogged system does not make for good outcomes.”

The Ministry for Business Innovation and Employment (MBIE) told me work was continuing on the exposure draft Insurance Contracts Bill and it was “planned for release for public consultation in the coming months”.

Like pretty much everything else that is not specifically Covid-related, MBIE says the work has “had to be put on hold at times over the past two years due to the COVID-19 response and other Government priorities”.

 

But I’d argue this issue is very much Covid-related. Studies both internationally and from Kiwi researchers are showing spikes in negative mental health and wellbeing globally since the beginning of the pandemic. The problem is, 18 months in, there aren’t enough of them yet. And insurance companies don’t make the big moves until there’s a critical mass of research to rely on.

Which is why we shouldn’t be too cynical about nib’s special offer – at least it’s willing to try something new – something which might help new customers take those first steps towards addressing their mental health issues (and let’s face it, a couple of grand will only pay for first steps.)

In the meantime, others will have to wait for action on a fairer system.

 


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