The Financial Services Council, which represents the big insurers as well as fund managers, has made a submission to Treasury for reforms to allow insurers to play a greater role in rehabilitation and therapies for workers suffering mental illness.
While the submission is confiential, it discusses the problems to do with exclusions for many ongioing treatments, which encompass both Treasury and health regulations. Mental health claims under super fund group insurance policies are a significant and rising proportion of all claims. It has been established, too, that the sooner an employee can return to work the better his or her chances of remaining in the workforce and therefore reducing both insurance and social security costs.
Speaking at the launch of SuperFriend’s Taking Action’ project for insurers and super funds last week, Sally Loane, FSC chief executive, stressed the importance of helping people who have suffered a mental illness back to work. The project sets out a best-practice framework for the management of psychological claims.
Loane said it was important that insurers adopt best practice in this area to help claimants’ rehabilitation, “and for the long-term sustainability of income protection cover”.
“Assisting people who have a psychological claim with their rehab increases return to work rates, which translates to lower claims costs for income protection on a new present value base,” she said.
“Higher rates of rehab are of benefit for all insurer lives and equate to a more stable premium on products, and a more sustainable industry all round.”
While Loane highlighted the benefits of an increased return to work rate for psychological claimants for the industry, she also noted that it was of benefit to the Government by cutting “the fiscal cost of disability support pensions and the NDIS”.
Despite the potential benefits of enabling the insurance industry to provide more targeted support, Loane said current legislative arrangements prevented life insurers for doing so, hampering their ability to maximise the help they can give clients.
She said the FSC was “interested in pursuing this as a reform” and had spoken to Treasury about adjusting legislation to give the industry greater opportunity to support psychological claimants.
FSC lobbies Treasury for mental health reform