The impact of psychosocial factors on mental health and their implications in life insurance

The growing recognition of the social and economic impact of mental health conditions has provided the impetus for pertinent policy considerations across many organisations as well as industry and government.

From an Australian perspective, the cost of mental illness to collective wellbeing has reached $211 billion pa, approximately 12 per cent of our annual economic output.

MENTAL HEALTH CLAIMS INCREASE

The life insurance industry is a sector experiencing an increase in mental health income replacement claims.

The most widely acknowledged social and individual impacts of mental health problems for adults are the flow-on financial, familial and social effects of unemployment.

This whitepaper, jointly supported by KPMG and the Financial Services Council of Australia (FSC), describes the systematic review of the relevant literature relating to the development of mental health conditions based on the biopsychosocial model of healthcare.

Evidence supplemented by interviews with six experts in the field of mental health, insurance and the workplace.

EXPERTS POINT TO PSYCHOSOCIAL FACTORS

The experts comprise academics, disability and workers’ compensation policy advisors, a disability services executive, clinical and organisational psychologists and expert on return to work and life insurance.

All of these experts have worked with insurance companies either in Australia or overseas.

The research finds significant evidence to suggest that in addition to the biomedical factors, psychosocial factors can assist to predict the onset of mental health issues as well as prolonging them.

STRATEGIES FOR INSURERS

The assessment of psychosocial factors can be used in the underwriting and the management of mental health claims in order to support the needs of customers early with the right level of service intervention.

In deriving strategies for the life insurance industry in relation to mental health, this paper focuses on three key areas: product design, claims and underwriting.

In its recommendations, it considers prevention of mental health issues through the adoption of strategies with a psychosocial focus.

The results of this research are intended to guide life insurers on the integration of psychosocial factors into their business practices, and to help them recognise how such factors impact the continuum of a customer’s mental health lifecycle.

Download the Whitepaper