Finding peace of mind

Finding peace of mind
Finding peace of mind

How can insurers provide cover for mental health-related issues?

Insurance cover for mental health-related issues can be absent in many travel and IPMI policies, though this may be about to change. Tatum Anderson and Lucie Wood take a look at what’s on offer and assesses how insurers might provide cover for such insureds

It has been long-standing that for most standard travel policies, pre-existing medical conditions, including a mental health diagnosis or reoccurring illness, will not be covered. When insurers do provide such cover, premiums can be high. But a landmark ruling in Australia in December 2015 could mark a sea change in the global travel insurance market where insurers not making a mental health provision will be breaking the law.

Ella Ingram, a 21-year-old woman from Melbourne, suffered from depression since she was 17. When she was unable to go on a school trip to New York because she was too mentally ill to travel, she claimed on her travel insurance with QBE but was refused reimbursement. QBE’s travel insurance did not cover trip cancellation due to mental illness, even if that illness was not a pre-existing condition.

In court, Ms Ingram’s depression was found to be a disability and QBE Insurance was found guilty of ‘direct discrimination’ and breaking the Equal Opportunities Act of 2010. Ms Ingram commented: “I guess knowing that many other people were going to be in a similar situation to mine … I would like insurance companies to treat mental illness the same as any other physical illness. We’re in the 21st century and … it’s time that they get up with the programme.”

While the best insurers offer cover for diagnosed psychiatric conditions, many exclude self-harm along with alcohol and drug misuse, even if they can be attributed to mental health issues

QBE, who were ordered to pay AU$4,292 in travel costs and $15,000 in compensation, said that mental health was excluded from its policy because its research showed that there was a high risk of cancellation because of mental health illness and that to cover it in future would mean an increase in premiums. “The general insurance industry relies on insurers being able to price products appropriately to reflect risks and, as such, the law in each jurisdiction recognises insurers are entitled to discriminate on this basis,” it said.

Escape route
While QBE lost this case, it does not mean that every insurance company in the country will come under fire. Despite legislation – in this case the Commonwealth’s Disability Discrimination Act 1991 and Victoria’s Equal Opportunity Act 2010 – making it illegal to discriminate on the basis of a disability when providing goods and services, including mental illness, the insurance industry – in Australia and globally – generally has an escape clause. It can discriminate if it has statistical or actuarial data showing that discrimination is based on a greater level of risk. Yet, the industry is proving to be elusive in revealing this data and, crucially, is not explaining the basis of claims denials.

“Under the relevant anti-discrimination legislation, insurers can only discriminate if it is reasonable to do so, taking into account reasonable actuarial and statistical data and other relevant factors,” Victorian Legal Aid (VLA) civil lawyer Greg Buchhorn told CHOICE, an Australian consumer advocate. “This case will test whether, in this instance, the insurer’s actuarial and statistical data was reasonable.”

“We’d like to see transparency around the actuarial and statistical data,” added VLA equality law programme manager Melanie Schleiger. “Not having access to such information makes it impossible to know whether the decision to refuse cover or deny a claim is lawful.”

Nine to five
Mental health is an issue that affects people of all ages and in all walks of life. In the workplace, for example, mental health provision is scant and many companies are often slow to recognise mental health problems amongst their staff. Only 42 per cent of FTSE100 companies acknowledged mental health as an issue; only 30 per cent have programmes specifically targeted at mental health in their workforce; and just 12 per cent reported mental health cases in their workforce in 2014, according to Lockton, a global insurance broker, in a May 2015 report.

So serious is the problem that in 2015, the Organisation for Economic Co-operation and Development (OECD) embarked upon a major strategy to combat the woeful lack of treatment available to people of working age with mental health problems and to ensure they receive adequate support in education and at work. Insurance policies that offer the appropriate treatment for those experiencing debilitating mental health problems abroad certainly help.

It’s often true that mental health provision plays second fiddle to physical health services in many countries. Few countries – even in rich OECD nations – provide adequate services for their populations and many working-age people with mental health disorders – even severe ones – are not in treatment at all, according to a 2011 OECD report, Myths and Realities about Mental Health and Work. In fact, says the report, about a fifth of the OECD working-age population experiences clinical mental-health problems at any one time. Most of these experience mild to moderate conditions such as depression, anxiety and substance abuse.

Away from home
International students are particularly vulnerable to anxiety, says Manny Soar, insurance manager at the International Association of Student Insurance Services (IASIS), a non-profit organisation supporting insurers and operators in the student and youth travel market. “International students are typically away from home for several years and experience potentially highly stressful changes; going to a new country, a new living environment, without family and friends,” he said. “On top of that, many students may feel pressure to perform well in their studies, especially if families at home are funding their education at great expense. They may also not know where or how to access mental health services when they go into crisis.”

That there is so little mental health parity would also suggest that insurers see unpalatable longer-term risks in particular populations. Students, for instance, are a risky bunch when it comes to mental health because they are young – typically between the ages of 17 and 25. According to a 2011 report on students and mental health by the Royal College of Psychiatrists, most lifetime mental disorders have first onset by the age of 24. Entering higher education may increase the risk of mental health problems, but also coincides with the high-risk period for the onset of schizophrenia and bipolar disorder in late adolescence and early adulthood. Some in this age group may also have long-term conditions that started in adolescence, such as anorexia nervosa.

So why is insurance coverage for those who develop mental health problems so limited? “The main issue behind this problem is that, as a society, we simply don’t understand mental health conditions anywhere near as well as we understand physical ailments like diabetes or high blood pressure,” says Darren Counsell, director at Pacific Prime, an IPMI broker based in Hong Kong. “This makes it hard for insurers and the actuaries developing plans to analyse the risk associated with mental health, and from this data develop the correct plans to insure against this risk.”

Policy premiums
Among international private insurance policies that cover expatriates, policies may cover employees for a limited number of days’ mental health treatment in any given year, or even a lifetime. Some, for example, award US$25,000 coverage but only 60 days of treatment in a lifetime.

Policies often mandate unusual care pathways too. Many do not cover visits to psychologists, for instance, unless referred by a psychiatrist. However, in other healthcare settings, such as the UK, it is extremely unusual for patients suffering from the most common mental health problems to be overseen by a psychiatrist. Normally, psychiatrists are referred to for more severe problems that require heavy-duty drugs such as lithium.

Even gold standard IPMI cover tends to exclude the very symptoms presented by those suffering from mental health problems, explained Counsell. “While the best insurers offer cover for diagnosed psychiatric conditions, many exclude self-harm along with alcohol and drug misuse, even if they can be attributed to mental health issues,” he said.

Some insurers charge a premium for mental health coverage and stipulate that there should be no reports of mental illness for up to two years after the policy is taken out before this limited coverage can be claimed. “In short, many popular insurance companies do actually cover psychiatric conditions, but often insurers impose low limits and caps for coverage related to treatment of these conditions,” Counsell added. Long-term risks might be seen as particularly troublesome when it comes to policies that cover expatriates. That’s because IPMI policies are often guaranteed renewable, which means they must guarantee cover to policyholders for years.

Student policies lacking
For students, the picture is not much better said René Gillet, director of international sales at Dr Walter Insurance, a German travel and health insurance broker with a focus on students and expats. Some international student policies do not cover mental health problems at all, he said. Others provide coverage up to certain cost limits and only if the mental health problem is not related to a pre-existing condition. “It is very hard to find a student insurance policy covering mental health problems,” commented Gillet.

And things get worse when these vulnerable students volunteer abroad – sometimes as part of their courses, but often to enrich their life experiences while studying. “More and more students travel to countries where they are exposed to critical situations,” said Gillet. “For instance, when doing volunteer services in critical and politically unstable regions,” he added. This increases the risk aspect for insurers, making policies for students more expensive and less comprehensive.

“A psychosis always results in repatriation as the patient needs long-term treatment in the home country and cannot return home without being accompanied by a doctor on the return flight,” Gillet said. While a mental health crisis may make a speedy return home essential, it is unlikely to be paid for by the insurance company, unless it is particularly serious and there are no comparable mental health services available in the country where the patient is working or studying. Mild and moderate depression is unlikely to lead to a repatriation, for example, but other illnesses may.

mental health conditions are often under-insured and it is likely that a patient who is diagnosed with a chronic psychiatric condition could find themselves unable to cover treatment costs associated with the condition

The US State Department does mandate that students holding a J-1 visa (issued to individuals approved to participate in work- and study-based exchange programmes) must have minimum cover, but they don’t require that universities provide that coverage. In other words, it’s up to students to purchase coverage individually and they may or may not buy the right plans, says Todd A. Hancock, executive vice-president and COO of IMG. “Some students don’t feel like their needs require benefits for mental health, but others do. Because of this, we provide plans for both, and those plans are priced accordingly,” he said.

Luckily, many universities are tackling mental health issues head-on, according to Hancock. Some US institutions mandate insurance that exceeds J-1 visa requirements to ensure their students are appropriately covered. Others provide their own services. “In fact, we’ve found that most universities offer some form of low or no-cost mental and nervous treatment through the campus health centre,” he said. “Universities have a vested interest in ensuring their students graduate. Mental illnesses can affect students and prevent or delay their graduation.”  

Mind versus body
Despite the existence of MHD (medical history disregarded) policies, underwriters seem reluctant to cover mental health treatments in the same way that they would cover physical health treatments, said Dr Walter’s Gillet. “Many international policies do not treat mental health problems as any other illness and provide a less comprehensive coverage for these kinds of claims,” he said. “It is still hard for specialist brokers to convince underwriting insurance companies of providing a comprehensive coverage in this field.”

Other international brokers agree that mental health parity is sorely lacking in many policies. “I personally believe that mental health conditions are often under-insured and it is likely that a patient who is diagnosed with a chronic psychiatric condition could find themselves unable to cover treatment costs associated with the condition, even if they have insurance,” said Pacific Prime’s Counsell.

Certainly, mental health problems are almost never covered as a pre-existing condition within individual policies. However, some companies may choose IPMI policies for their employees that include this. Such policies can include the MHD clause, which means pre-existing conditions can be covered, including mental health problems.

MHD is unheard of within student policies, but that’s perhaps because those buying policies are assessed individually. Group policies, such as IPMI cover, pool the risk (and are far more expensive) and that’s why some cover more conditions.

Laws of the land
It is not clear yet what effects the Melbourne mental health case will have on the global travel insurance industry, but it is obvious that without a change in the law, some insurers are reluctant to enhance coverage. While a number of countries are forcing insurers to provide some form of mental health parity within their policies, this may not necessarily improve coverage, and insurers are still able to load the premium to make coverage more expensive.

In the UK, the Disability Discrimination Act means that companies are not allowed to automatically charge more, or refuse cover because of a mental health problem. “They must be able to demonstrate that the risks of a claim being made are statistically higher as a direct result of a specific mental health problem,” said the Scottish Association for Mental Health (SAMH).

Indeed, as medical screening programmes become more sophisticated, they are enabling the insurance industry to better meet the needs of this particular group of customers. Fiona Macrae, head of client relationships at UK-based Travel Insurance Facilities Group (TIFG), for example, told ITIJ: “TIFG has adapted and enhanced its medical screening criteria over many years to offer cover for people with mental health issues, at a fair premium to the customers, by utilising their bespoke medical screening tool, Protectif Medical Risk Rating. Mental health is a very broad term and covers many differing conditions, all with different risk factors, we know the importance of understanding a condition before underwriting the risk.” She added: “Protectif allows us the ability to look at the actual risk someone with a medical condition poses, rather than the perceived risk of their condition. We work with the charities who are supporting people living with the conditions to really understand the risk and to define appropriate questions to ask, which gives the underwriters confidence in Protectif Medical Risk Rating outcomes and customers confidence to use the tool.”

The US has also strived to achieve mental health parity through two laws: the Mental Health Parity and Addiction Equity Act and its Affordable Care Act, which together prohibit limitations in coverage within many health plans. However, according to a recent report published within the journal Health Affairs, there is poor and patchy enforcement of these laws, which has meant many travel insurance policyholders are still not covered sufficiently for mental health problems.

In Australia, VLA is calling on insurers to disclose and explain the basis of mental illness claims denials, which is not currently common practice. VLA also wants insurers to consider a policyholder’s individual mental health circumstances, rather than imposing a general exclusion covering all mental health-related claims. Will there be a time when a policyholder with a mental health issue is treated the same as one who has a history of diabetes or a broken leg?

Watch this space.