Insurance
Mental health tops TPD claims

The underlying causes of total and permanent disability claims have been revealed in new research, and mental health tops the list.

Life insurers pay out more on TPD claims caused by mental health conditions than any other kind of condition, according to the latest six-monthly analysis of life insurance data collected by the Financial Services Council and KPMG.

The FSC claims the data collection initiative is "unsurpassed anywhere in the world" and for the first time reveals the extent of TPD claims for mental health conditions. In total, more than 24% of TPD claims paid out by Australia's life insurers in 2018 were caused by mental health conditions - more than any other cause.

The proportion of the FSC's research also indicates the types of mental health conditions which cause TPD claims.

According to that data, the top four conditions account for around two in three mental health TPD claims, with 22.9% for reactions to severe stress - such as post-traumatic stress disorder - 16.8% for depressive episodes, 13.2% for recurrent depressive episodes and 10.3% for "other anxiety disorders" which includes panic and anxiety disorders.

KPMG partner in charge of actuarial and financial risk Hoa Bui noted around half of all Australians would face a mental health condition at some point in their lives, and said despite taking longer to be reported and assessed, were still paid out at 91%, a rate she described as very high.

"KPMG will continue to gather and analyse even more granular data - which will help inform better products and services for life insurers, and policy development, when dealing with mental health," Bui added.

The research comes as the peak body for the shared value business strategy warns Australian businesses of Australia's mental health crisis.

The Shared Value Project - in partnership with SuperFriend, NAB, AIA and others - is calling on Australia's business community to adopt a new strategy for addressing mental health in Australia, which it claims costs the economy around $60 billion per year.

According to the group, lost wages, decreased productivity and support services related to mental health cost businesses around $13 billion each year. Commissioner for the Royal Commission into Victoria's mental health system, Allan Fels said financial services firms in particular need to address the issue.

"The prevalence of mental illness and its impact on our weakening economic growth rate calls for an urgent response from business," Fels said.

"For the industries most impacted by poor mental health, such as financial services, this is not only a competitive business opportunity, but vital risk mitigation.

"Companies rely on the productivity and prosperity of their stakeholders, and they limit their success if this isn't taken into account."

The group believes financial services firms can both solve the issue from a social perspective, while strengthening their bottom line. It points to NAB as an example, which has recently focused its efforts on proactively strengthening the mental health and wellbeing of all stakeholders.

"At NAB, we see shared value as integral to ensuring our long-term success; and improving the financial health of our customers is one of our key goals," NAB general manager of social impact Sasha Courville said.

"Given the strong relationship between mental health and financial health, we identified the need for NAB, and other business, to better understand and address this issue."

Shared Value Project chief executive Helen Steel said business sustainability and resilience can be enhanced simply by improving the operating environment.

"Addressing mental ill-health can increase employee efficiency and attendance, improve customer engagement and financial stability, and create more thriving communities to do business with," Steel said.

"Ultimately, healthier stakeholders equate to a healthier bottom line."

Read more: NABKPMGFSCShared Value ProjectAIAAllan FelsFinancial Services CouncilRoyal CommissionSasha CourvilleSuperFriend
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