People already on claims would stay on payments for longer, Mr McCormack said, as reduced work hours combined with a highly competitive labour force created a disincentive for people to go back to work.
“As an industry, we will be wrestling with these dynamics for the foreseeable future,” Mr McCormack said.
A study by KPMG and the Financial Services Council released in June found the number of mental health claims had doubled over the past five years, with mental disorders now the third most common cause of disability income claims, ahead of cancer and beind accidents.
Also speaking at the panel, Senator Jane Hume described mental health as a “looming crisis” for the life insurance industry and said the government – including the Treasurer and Health Minister – was alert to the issues and “open-minded” about ideas for reform.
Senator Hume suggested replacing total permanent disability insurance (TPD) lump sum payments with paid treatment plans.
“I did heard somebody say handing someone a lump sum, a significant lump sum, to somebody that potentially has mental health problems could translate to other problems, whether it be gambling or whatever it might be,” Senator Hume said. “It’s a little bit like handing the car keys to a 16-year-old and saying here go to it – that’s not going to cure the problem, it’s actually potentially going to make it far worse.”
The chief executive of health insuruer AIA, Damien Mu, said the two were not mutually exclusive and defended lump sum payments as being important for people who need to make adjustments to their house or lifestyle after sustaining a permanent disability.
However, he called on the sector to fine tune early intervention measures to ensure premiums did not become unaffordable and design benefits tailored to specific mental health conditions.
“We need to be here for the long term to be able to pay those claims over many, many years,” Mr Mu said. “How do we build products to support Australians knowing that one in two Australians in their life will have a mental health issue?”
If you or anyone you know needs support call Lifeline on 131 114, or Beyond Blue’s coronavirus mental wellbeing support service on 1800 512 348.If you or anyone you know needs support call Lifeline on 131 114, or Beyond Blue’s coronavirus mental wellbeing support service on 1800 512 348.
Charlotte is a reporter for The Age.