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This article is prompted by this piece in the press this weekend: Is crying good for you?. It reminded me of many discussions I have had over the years as to underwriting approaches for people who had disclosed some element of stress, depression – or emotion – in their underwriting application.
It is hugely encouraging that as a nation we are breaking down the “stiff upper lip” mentality and at least beginning to share our feelings and talk about mental health in a more open way. I think we are getting left behind in underwriting, and risk applying outdated approaches to a changing society.
It starts with the words we use – “stress” means something very different to a doctor to the person who has a deadline to meet in 27 minutes time. This prompts inconsistent disclosure – the customer (or IFA) not unreasonably translates traditional wordings as “they can’t possibly really mean “Have I ever had stress, so what they must really mean is…”
If a disclosure is made more questions are asked. There are different approaches used. Most common are system driven questions backed by a calculator that asks black and white questions about time off work, medication and the like. Some others will use a more open, teleunderwriting approach using nurses to ask questions they deem appropriate and leaving the underwriter to interpret the answers as they see fit.
The underwriter is then left with real life situations where “the manual doesn’t tell me what to do”. In insurance offices up and down the country today there will be underwriters asking “should we rate at +50 for Life, and should we apply a mental health exclusion for Income Protection” on applicants who:
- Have never had any mental health problems, but are still seeing a counsellor a year after their divorce, “just to keep a check on things”
- Took six weeks off last year after their mother’s death because “it hit them really hard”
- Attempted suicide four years ago when in an abusive relationship, and have since got divorced and had no history of depression for the last three years.
- Have been on regular anti-depressants for the last five years, but with less than a week off work for ill health over this time.
From a very personal perspective I believe that crying is good for you, that counselling is a very sensible route to take and that I would be more worried about accepting someone who has had no time off work after the death of a loved one than who has had a bit longer than we might expect.
I was therefore always very drawn to the concept of resilience. I was introduced to resilience by the fabulous Claims Medical team when working at Swiss Re, and in particular the research done by Monica Garcia on this. Resilience combines the events that have happened in your life with your reactions to it – and so attempts to understand and measure the different ways people behave to the same triggers. The framework recognises that there are stressful times in peoples lives – around moving house, divorce and bereavement for example, and measures people’s responses to these real examples.
This concept is being introduced by enlightened claims teams to help claimants when things go wrong, but needs to be woven more thoroughly into the underwriting process. Potentially this bridges the gap between personal opinion and provable science. It gives structure to an underwriter to make a fair decision reflecting the individual situation of an applicant and their life experiences and responses. Establishing why the applicant had time off work for depression, and whether that trigger is still relevant is more important than our current box ticking obsession with quizzing them and their doctor on whether they had four days or six days off.
We’ve come a long way in medical science from dealing with mental health problems by drilling holes in heads to let out evil spirits, but I think in the future we may look back with similar shocked wonder at the rudimentary approach we take to underwriting this today. This should be both a concern for the customer who has unfair exclusions or premiums added, and for the insurance company that is not picking up more genuine risk factors in other individuals.
I’d be really interested to hear your thoughts on this topic generally and the specific scenarios above – please do get in touch whether you agree or not!
Media / Blogs
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