TAL has released a white paper on mental health and the challenges the illness poses to the life insurance industry and community at large.

The paper lists key areas that life insurers need to consider amid growing concerns over the premium sustainability of total and permanent disability (TPD) and income protection products, as mental health claims continue to increase.

Pricing, prevention, risk assessment, claims management, claims validity and new product design are some of the areas in need of more focus going forward, the paper says.

On pricing, premiums for TPD and income protection covers are currently set based on morbidity actuarial tables as well as previous claims experience of the particular distribution channel. The changes to the national statistics on mortality or morbidity are generally not taken into account as an overlay or adjustment when pricing.

The paper says actuarial tables should be updated regularly and include new diagnostic and treatment regimes as well as economic factors that may impact health, particularly mental health.

Life insurers should consider stepping up their support for targetted programs that prevent mental health. This is an area that needs far greater investment by life insurers to reduce the impact of claims as well as contribute to improved mental health wellbeing of all insured Australians.

On the subject of risk assessment, TAL says the process could be further improved by also asking policyholders questions regarding known risk and protective psychosocial risk factors in order to more accurately identify those at risk of time off work due to a mental health condition.

Risk assessment is currently based on diagnosis, treatment, severity, relapse or recurrence and time since last symptoms. The inclusion of psychosocial factors may lead to a more accurate risk assessment process.

TAL Group CEO Brett Clark says the white paper aims to “stimulate discussion about a pressing issue: the mental health of our community and the implications for the life insurance industry.”

“Through this white paper we are seeking to contribute to the important discussions currently being had on mental health, including the role service providers, and in particular life insurers, can play in better supporting Australians in managing their mental health,” Mr Clark said.

“This white paper takes a ‘whole of environment’ approach and examines factors ranging from mental health terminology, diagnosis, and treatment, to the way we are designing products, addressing support, and delivering prevention initiatives.”

Click here for the report.