Insurance
Life insurer early intervention a win: Research

New research strongly backs the economic and health benefits of allowing life insurers to provide intervention and rehabilitation treatment for thousands of Australians each year.

The study, conducted by the Financial Services Council with the help of Cadence Economics, analyses the potential advantages of overhauling current legislation that prevents life insurers paying for the treatment of uninsured Australians at risk of long-term incapacity.

Based on Cadence Economics estimates, reforming the system can make a difference in the lives of 10,118 people per year. Of this pool, early intervention can help 1379 people and potentially as many as 3600 under a best-case scenario.

About 87 people each year can be prevented from becoming totally and permanently disabled with the additional healthcare intervention of life insurers, the research said.

Early intervention by life insurers could also slash return-to-work times to five weeks from the typical 13 to 18 weeks, it said.

The report noted while the bulk of workplace injuries relate to musculoskeletal disorders, there has been significant growth in mental illness claims.

"Claims for mental illness are particularly costly, with relatively high median compensation payments and, by far, the longest median time spent off work (16 weeks) compared with other injuries or illness," it said.

AIA Australia and New Zealand chief executive Damien Mu has been actively urging the government to lift legislative barriers that restrict life insurers from funding medical treatments for mental health conditions.

The health care system has to keep up with one of the fastest growing issues confronting many Australians and change is long overdue, Mu said.

Recognising that certain constraints in the current system are leading to negative outcomes for some vulnerable Australians, the FSC noted a Parliamentary Joint Committee is currently considering whether to allow life insurers the ability to provide targeted rehabilitation payments for Australians in need.

Should the reforms pass, Cadence Economics quantified government savings of $1.12 billion over the next two decades; more people in the workforce will contribute $405.7 million to the economy by 2040.

FSC chief executive Sally Loane said the research clearly shows that allowing life insurers to enable the provision of health treatment earlier has the potential to increase the quality of life for individuals and will provide a better chance to return to wellness.

"In some cases, it may even reduce the likelihood of someone becoming permanently disabled. By removing the existing barriers, which do not exist in other markets, these early interventions have the potential to allow customers to return to work five weeks earlier and will deliver significant short, medium and long term benefits to the Australian economy," she said.

Read more: Cadence EconomicsFSCAIA AustraliaDamien MuFinancial Services CouncilParliamentary Joint CommitteePJCSally Loane
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