Legal and regulatory update for the life and health insurance sector
Conduct and brand

Consumer magazine on mental health underwriting and more daily news

In April, Consumer Magazine published an article on the underwriting of mental health conditions. My thoughts on the article are below:

Positives: the article is a good vehicle for the complaints levelled against the insurers, relying mainly on the Beyond Blue report from Australia and some good personal stories from applicants.

Problems: while calling for fairness, it fails to explore in detail how underwriting is done, what is meant by unfairness, or the complex issue of fairness to other policy holders and the effect on them. There is no exploration of the economics of underwriting or how the proposed changes would affect the market. There are serious issues to consider in the underwriting of mental health problems, as there are with many others. One the one hand questions are criticised for not being personalised enough, on the other hand they are criticised for being too ‘invasive’. There does not appear to be a clear idea of what good looks like.

As a publication meant to enable consumers to make better choices about products and services to acquire, I was left wondering, as a consumer, what this article was suggesting - it seemed not to guide consumers either towards or even away from any specific product but could easily put off applications from people with mental health problems, when in fact a lot of cover is available for them, and a lot of good work is done in underwriting to enable insurance to work for the whole risk pool.

 

More daily news:

  • Financial Advice New Zealand is running a licensing workshop with the FMA on the 27th
  • The FMA is also running a licensing event supported by Partners Life and Fidelity Life on the 5th of May - details here.
  • FANZ also has the details of a member survey on adviser attitudes towards the government proposed income insurance scheme - 23% support the idea, while many are undecided or would prefer a scheme in partnership with industry (more like KiwiSaver).

 

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