A mystery shop of insurance companies has revealed a “systemic failure” in the way they treat people with mental health issues, Consumer NZ says.
The watchdog tested 14 Insurers, with three shoppers calling each company to get cover for health, life and income protection.
The exercise Revealed people who sought advice or help for their mental health could be regarded as “high-risk” Claimants, resulting cover being excluded.
Consumer NZ lead Investigative Writer Cherie Lacey said although the exclusions and stand-down periods were a standard legal and insurance practice, how they were applied to mental health needed to change.
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Many New Zealanders were unaware that what they shared with their doctor could impact their insurance cover.
“This is problematic because people should be free to discuss mental health concerns without fear of repercussions.
“There’s a disconnect between how the public views mental health and how insurance companies factor that into their policies.”
Consumer NZ found mental health exclusions could be added to insurance policies after speaking to a GP about stress, marriage counseling or bullying.
In Sophie Robinson’s case, a “mild and fully-treated fear of flying” led to her exclusion.
In 2017, Robinson’s job involved both international and domestic travel which she caused her some stress.
Her fear would begin to build at the airport and last throughout the flight, with Robinson keeping an eagle-eye on the flight attendants for any sign something might be amiss.
“As soon as we landed, I was completely relieved – I could go straight into a work meeting,” she said.
After several stressful flights, Robinson visited her GP who prescribed a short-acting medication to relax her before flying and recommended a desensitization program with a psychologist.
“That meant I went on to the planes relaxed, having taken my medication, and then I had mechanisms in place with the psychologist, involving listening to podcasts and distracting myself from the flights,” Robinson said.
About a year later, she was single, living in a rental and with a good job but limited savings, and concerned about what would happen if “everything went tits up.”
“My solution at the time was to take out income protection insurance, so I went to see my bank. They asked me to see my health records, asked about my income and after a couple of weeks, they came back to me and said they were happy to advise that they were happy to offer me a cover. ”
However, there were two exclusions, one for a childhood knee condition, and one for her “mental health condition.”
“The mental health condition was news to me. As far as I and [my doctor] were concerned, I did not have a mental health condition. ”
Despite a letter from her GP which explained the context and stated that Robinson had no ongoing mental health issues, the bank stood firm.
“There was no way they were going to give me the full insurance cover that I needed. Interestingly, they didn’t offer to give me any discount on my premiums to reflect the more limited cover, ”Robinson said.
Lacey said mental health was a widespread issue in Aotearoa, with one in five New Zealanders experiencing challenges every year.
While all of the Consumer’s Mystery shoppers were offered insurance, most were told additional paperwork would be needed for the underwriter to decide whether any exclusion or stand-down period would apply to their policy.
To make an assessment on a policy, Insurers may obtain a customer’s full medical history to determine the risk level of a potential claim.
Medical history extends beyond diagnosis and the prescription of medicine to also include consultation notes from a GP, so Insurers can be privy to what is discussed in the doctor’s office.
Lacey said the organization took issue with Insurers making decisions based on medical notes without getting clarity on diagnosis or understanding the circumstances in which someone received mental health support.
The Mystery shop also highlighted the different approaches to covering mental health by Insurers. While one may limit cover or add exclusions, another could accept the applicant “as is,” putting little to no caveats regarding mental health on their policy.
“Confusion reigned when talking to the insurance companies,” Lacey said.
“Upon follow-up, several told us that the initial advice the financial adviser gave was incorrect. Some provided mental health cover, while others could not give a clear answer on whether there would be cover without a full underwriting assessment. ”
She said the investigation highlighted the problems with the insurance industry and how it approached mental health.
“We believe mental health exclusions point to a systemic failure in the insurance market, which could amount to discrimination on the grounds of mental health.
“We think the industry has a lot of catching up to do in terms of their definitions of mental health and consistency in their approach and communication of mental health exclusions.”