How mental health disorders affect insurance risk assessment

Mental health challenges affect all sectors, and the insurance industry is not immune.

Underwriting Manager at Bidvest Life, Shanique Jina, said the increasing prevalence of mental disorders presented challenges and opportunities for the insurance industry.

“To address this growing trend, insurers and financial advisors must adapt their strategies and develop a deeper understanding of mental health conditions,” Jina said.

Citing research by the South African Depression and Anxiety Group (Sadag), Jina said the aftermath of the Covid-19 pandemic negatively impacted people’s mental health due to joblessness, among other related factors.

“Healthcare professionals, insurers, and financial advisors are now actively engaging in discussions to address the rise in mental health disorders and its implications,” said Jina.

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Impact on underwriting

The insurance underwriter said accurate risk assessment is important to coping with the challenges presented by mental health conditions.

She said SA insurers predominantly dealt with anxiety, depression and bipolar disorders.

“These conditions are complex, and understanding them helps insurers to better assess and underwrite [the] risks associated with each,” she said.

“By doing so, insurance processes can better reflect the associated risks of these disorders,” she added.

Anxiety disorders

Jina said that while anxiety disorders were among the most common mental health issues, “full remission rates remained low,” adding that insurers must show empathy.

“Whether symptoms are chronic or recurring, insurers must be sensitive to the social impact of anxiety disorders, as they can affect an individual’s social life and productivity at work,” she explained.

Jina also said that anxiety cases were all unique and complex and must be assessed on an individual basis.

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Depression and bipolar

Jina said it’s also vital for insurers to consider the impact of depressive disorders on mortality and morbidity, including the heightened risk of suicide.

With bipolar disorders, Jina said the associated morbidity risk was substantial – affecting the occupational and social functioning of many individuals.

“Assessing the course of [an insurance holder’s] illness, social implications, suicide risk, and other causes of increased mortality is crucial in evaluating risk,” she said.

What does risk assessment entail?

“[Assessing disability] entails looking at the extent of a person’s impairment needs in conjunction with their job description, policy disability clause conditions and personal factors such as education and experience,” Jina said.

The underwriting expert further explained that a holistic evaluation of an individual’s impairments, job description, policy disability clause conditions, and personal factors were essential to the assessment process.

“Disability assessment is a legal decision, not a medical one, involving experts in various fields,” she said.

“The doctor treating the patient cannot express an opinion on disability,” she added.  

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Rethinking the underwriting process

Regarding the overall underwriting process, Jina said it’s important for the insurance industry to evolve to accommodate the increase in mental health disorders.

“By developing a deeper understanding of mental health disorders, insurers can enhance risk assessment and better address the scope of these challenges,” she concluded.

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