Investec Life flags mental health

Investec insurance provider to pilot new tool to get fuller picture of client-support structures

Investec Life, the high-end insurance provider to Investec’s private banking clients, is looking at ways to improve its risk assessment of mental health issues during the underwriting process. Sinenhlanhla Sithomo, Investec Life’s head of insurance, said: “As an insurer your biggest risk isn’t actually the people who are disclosing their mental health the people who issues,’it’s aren t aware of their condition and aren’t being treated.”

Investec Life, the insurance provider to Investec’s private banking clients, is looking at ways to improve its risk assessment of mental health issues during the underwriting process.

The bank’s insurance unit, launched from scratch in October 2017, says it plans to pilot a new assessment tool in early 2023 that was developed by a global reinsurer, which it will name at the official rollout tentatively scheduled for March. The toolkit aims to get a better picture of clients’ social support structures when evaluating mental health risk indicators.

“Insurers globally have traditionally followed a biopsychological framework of risk assessment, which looks at the biology of the client their age, gender and the psychological aspects of any condition they may have,” Investec Life’s head of insurance Sinenhlanhla Sithomo says.

“People may present the same biopsychological factors but their risk assessment can differ according to the strength of their social support structures ... which can affect their risk of claiming income support or life cover due to suicide.”

A December 2021 report by the Chief Risk Officer’s (CRO) Forum shows over the past decade a shift in insurance claims from physical to mental health with burnout, anxiety, and depression overtaking musculoskeletal impairments and neurological diseases.

With the latest data from the SA College of Applied Psychology indicating that only 27% of severe mental illnesses in SA are treated, Sithomo says undiagnosed mental health conditions could be a hidden crisis facing the insurance industry.

RED FLAGS

“As an insurer, your biggest risk isn’t actually the people who are disclosing their mental health issues, it’s the people who aren’t aware of their condition and aren’t being treated,” he says. “Once your mental health claims start ticking up above your musculoskeletal claims, your amber flags are no longer amber, they are red flags at that point.”

One challenge for insurers is that developing objective diagnostic measurement tools for mental health conditions is not as cut-and-dried as doing so for medical conditions such as cancer or heart disease. When assessing mental health risk underwriters have to rely on questionnaires, which have traditionally given insufficient consideration to clients’ social support structures, often resulting in adverse underwriting outcomes for applicants that should have been deemed low risk.

“Clients who proactively seek care and disclose a mental health condition also tend to receive harsher underwriting outcomes compared to those who do not seek care and remain undiagnosed,” Sithomo says. “This is why it’s critical that we begin to transform our underwriting protocols and incorporate as many of the biopsychosocial factors in risk assessment for clients with mental health conditions.”

CATALYST

The catalyst for placing greater emphasis on mental health conditions has not been the economic stresses that have surfaced in the wake of Covid-19. Investec Life first began looking at mental health in 2018, when advisers reported increased mental health complaints from young doctors, Sithomo says.

Since then, the insurer has been looking at ways to better assess the mental health of its client base, with Sithomo saying rising income protection claims attributed to mental health are regarded as the “first amber flag” that the client population is under stress. A sustained increase in these claims is typically followed by a spike in longterm disability lump-sum claims from mental-health related issues. These claims are often followed by increased death claims from suicide.

While suicide typically has a two-year exclusion for claims, once that time period has passed, insurers are liable to pay out, meaning it is in both their and their clients’ interest that mental health interventions take place earlier rather than later.

Improving the identification of mental health risks during the underwriting process is one way to do this, but stigma can be a problem, particularly among male clients.

“As life insurers, we can contribute towards the destigmatisation of mental health by making changes in the way we underwrite these conditions,” Sithomo says.

“Greater awareness will go a long way towards destigmatising mental health as people begin to better understand their own mental health status and become open to disclosing the potential challenges they encounter when they seek out treatment. This shift is certainly in the interest of the life insurance industry.”