Episode 4 – Access To Insurance

Hi everyone, this is the third episode of our Mental Health in Life Insurance week. We have quite an unusual episode today, in that we have an adviser, actuary and underwriter all sat together to talk about insurance. It’s not often that you get such a broad insight of the industry all in one place.

We are talking about how insurers decide who can have what insurance and what price it will be. Actuaries take a look at huge amounts of general population data and analyse this to help them determine what might happen to these people in the future. They use data to produce statistics about how likely it is that person A that is X years old, will become seriously ill or die.

It is then the role of the underwriting developers to look at this data and decide what risks an insurer can and cannot take. For mental health this could be looking at the data on mild anxiety and deciding that the insurer can accept someone that lives with this at ‘normal’ terms (the basic premium). Or it might be that they look at data that shows that some conditions are linked to a statistically higher risk of ill health or death, with the decision to then charge a higher premium to.

The key takeaways:

  1. Insurers take broad population studies to understand how certain circumstances influence a person’s chance of being seriously ill or dying. This is then used to form many of their decisions, but they will also do what they can to listen to individual circumstances.
  2. An explanation as to why bipolar disorder is a condition that usually results in an increased premium for life insurance, and leads to some difficulty in getting income protection cover.
  3. A clear example of how a premium might be increased for life insurance, due to a mental health condition.

Without going into a deep data chat this episode helps us to see how insurers come to their decisions, based upon the way that the industry works at the moment, and upon the data that is available now. It’s always important to remember that underwriters are regularly reviewing what an insurer offers, and what is or is not available today, could change tomorrow.

We have Vanessa Sallows (Legal & General) and Monica Garcia (Monica Garcia Consulting) with us in our podcast tomorrow to discuss what mental health support there is for insurance policyholders before, during and after a claim.

Remember, if you are listening to this as part of your work, you can claim a CPD certificate on our website, thanks to our sponsors Octo Members.

If you want to know more about how to arrange protection insurance, take a look at my Protection Insurance in Practice course here.

Kathryn:       Hi everybody, this is episode four of season five and I have Fraser Ballantyne from Zurich with me and Lisa Balboa from Hannover Re.  Hi!

Fraser:        Hi Kathryn and Lisa.  Hi everyone.  It’s great to have finally made it onto this podcast after listening to so many episodes myself.

Lisa:            Hi Kathryn!  Hi Fraser!  Hi everyone, I’m really pleased to be with you all today.

Kathryn:       It’s lovely to have you both on.  So we’re on day three of our mental health and insurance awareness week and we’re now going to be focusing on mental health when it comes to underwriting and product development.  This is the Practical Protection podcast.  So both of you, obviously we’ve got you both here.  It’s not usual that we’d have a situation where there’s like an adviser that can sit down and like really go into the minds of an underwriting development person and an actuary, you know, we don’t tend to just generally get this.  So I’m not going to – if it’s okay with you two, we’re not going to go into too many pleasantries, we’re just going to get straight into it ‘cos I know there’s so much in your minds that could really, really be useful here.

So one of the things we’ve had like when we talk about mental health and insurance, you know, obviously from an adviser – from a consumer point of view, we do have so many times where we’re kind of like – it can be hard sometimes to kind of follow the decisions and I know that there’s logic behind them in a sense and also it can be quite hard in some ways because the logic can sometimes feel it goes against our emotions and things like that.  So I feel – but ultimately as well, insurers are businesses and insurance in itself is a risk-based thing and that is ultimately what we are doing and what we’re looking at.  So in terms of mental health, I know we’ve seen so many developments over especially the last 10 years.  I know, I’ve never been shy about what I went through when I applied for insurance 10 years ago when I first started with the life insurance.  I had all but two insurers decline me because I was living with generalised anxiety disorder and I’d had a couple of bouts of agoraphobia.  And I think probably – I know the agoraphobia is something that – isn’t something that everybody experiences obviously but like the generalised anxiety, I think a lot of people can have anxiety and it can be – that can kind of lead to a worry hearing a story like mine where it was a case of, “Well I was declined by quite a few.”

But even I can see, from what I’ve then experienced further going on where I wasn’t obviously – a few years ago when I redid my insurance, I wasn’t declined by everybody.  There was a lot of options and from the people that I help there are so, so many options now and it’s amazing to see what’s happened in the last 10 years.  But I think a really good place to start off would be to talk about how – because I don’t understand this myself.  Obviously I know what you each do but I also don’t know what each of you do in a sense.  I know I fully don’t understand what you get up to in your day-to-day lives.  But in terms of like mental health data and how it’s analysed, how those decisions are made, you know, what – how is that done?  How does that outcome kind of happen in insurance?

Lisa:            Yeah, thanks Kathryn.  I think hopefully I can unpack some of that logic that you were talking about there and really, you know, hopefully share some insights to everyone on this call.  Mental health, as you were describing, is so much more prevalent these days, so much more widely discussed.  So it would be really great to be able to explain that link of how we go from the data to the underwriting to the customer decision.  So let me unpack that a bit and – before I dive into the data, so as an actuary and I know that you know this about me Kathryn, I love the data side but I thought it’s worth just taking a step back and touching a bit on the underwriting process and Fraser’s an expert in that area.  So he’ll share lots more insights on the underwriting side later.  But in a nutshell, life and protection insurers have underwriting philosophies and these philosophies guide their customer decision-making and it’s the underwriting that sets the boundaries on which customers can be accepted for cover and on what terms.  So as you’ve mentioned Kathryn, we’ve seen quite an evolution of that over even the past 10 years in terms of what we can offer for customers with different health conditions and on what terms.

So, you know, as a customer applying for life insurance, it’s the underwriting that adjusts that end customer price and what’s important is that price is adjusted for factors that are connected to an individual’s increased mortality or morbidity risk or – just putting that in plain English, that’s those factors that potentially increase a customer’s chance of dying or getting ill.  You know, we’re not clairvoyant, we can’t predict any one person’s chance of getting ill or dying with absolute certainty but it’s about focusing on these averages and pooling risk together and understanding those factors that, you know, looking at a population level, there’s a higher chance of an individual dying or getting ill than someone without that health condition.

Kathryn:       So in terms of that when we’re sort of like saying, you know, you’re saying you can’t do it based upon one person.  You know, obviously, you know, we can’t do that, we have to take it upon the averages so in my mind I kind of – I’m quite visual so I kind of just see this massive database somewhere of – I don’t know, data from 10, you know, over decades’ worth of data, this kind of like – I can’t even imagine how much all this data is stored somewhere or how it’s even analysed but it kind of like says, “Right, all the people that were this age in this time period who had this, you know, the likelihood of – or this – the fact that, you know, this happened to so many of them that ended up with them being, you know, potentially more ill or developing a certain thing like cancer or heart disease and actually from this group as well, so many of them died.”  Is that kind of like a really, really basic way of kind of saying how that kind of data is gathered?

Lisa:            Yeah, you’ve put that really well so, you know, we need a large dataset there and it might not be sort of one giant dataset of everything together.  It’s about using the health and medical research that we have and population-based studies which are often on individual health conditions.  Sometimes it’s a big population study where there’s multiple health conditions that are explored but that data is there so the job of actuaries and underwriters is to use that data to then set the underwriting philosophy, so really be led by the data, be led by the medical community in terms of understanding those different risks when it comes to health conditions.

Kathryn:       Brilliant, thank you.

Lisa:            Yes, so these factors then – so it could be the mental health conditions, it could be physical health conditions as well and, you know, beyond health conditions it could be lifestyle factors such as smoking and alcohol.  It could be family history factors such as family history of cancer so the point of underwriting is to use all that data that underpins that to then adjust the price to allow for those material health and lifestyle factors that aren’t captured in the usual mortality assumptions that we as actuaries use to set the standard price of the insurance product.  So this kind of talks to your point Kathryn, earlier about that, you know, mental health is so prevalent.  I’ve seen stats where one in four people in the UK will experience a mental health condition at some point in their lives so that’s a huge prevalence so of course any mortality risk that can be attributed to these mild mental health conditions, you know, that will already be in the insurer’s standard life insurance price for typical, you know, risks that an individual would have in terms of any additional mortality or morbidity.  I mean, it’s already priced in, it’s already there.  It’s one in four – that’s, you know, 25% of us.  It’s a huge number.  So, you know, those conditions really wouldn’t – you wouldn’t expect anyone to be charged more for having those conditions.

Kathryn:       That’s really good and I think I was just going to say sort of like to kind of summarise that for people who are maybe not sort of like too familiar as well with how things work.  So in terms of like the insurance products and everything, obviously we all – there’s a base price, you know.  If somebody is a certain age, they’re a non-smoker, they want a certain amount of, you know, anybody regardless of their gender or anything like that, the price is the price in a sense and obviously if we’re talking about potentially increased prices it means that there’s something there that the insurer’s saying, “We think this might be a bigger risk of there being a claim on this policy so we’re going to increase the premium a little bit.”  And I think as well it’s always – a different podcast completely obviously because this is all about your technical minds but, you know, talking about those potential – what those increases can be, you know, sometimes they can be quite small actually the increases.  I think people sometimes think that if it’s an increase they’re going to suddenly – it’s automatically going to be really unaffordable.

But anyway, sort of like going back to that, you know, I think it’s important to just, you know, really catch on to what you just said there. So kind of like insurers now understand that, you know, anxiety and, you know, some stress – especially anything to do with like bereavement or just general life at the moment, you know, a lot of people are stressed.  We do live in a stressful kind of society.  Insurers understand that and are taking that onboard and if somebody does have, you know, some mild anxiety, some mild stress – to not in a sense – I was going to say not be worried.  I didn’t want to seem like I was being flippant to say that you shouldn’t be worried applying because obviously to each their own as to how they would feel, you know.  You’re potentially applying for insurance which is going to be very unusual for some people.  But ultimately to just be aware that insurers now are saying, “You know what?  Anxiety to a certain level is kind of normal and it’s kind of –”  We are – it’s a healthy reaction to certain situations as well as, you know, feeling bereaved as well as feeling stressed and they’re not going to be altering necessarily the pricing because someone has a bit of mild anxiety.

And I think that’s really important.  You know, there are certain points which I’m sure we’ll breach, you know, and sort of talk about a little bit to say there are times that the price is going to change a bit but what you were just saying there and is really important to hold onto is the fact that insurers are now taking this onboard as this is part and parcel of life for quite a lot of people now and if they weren’t taking that onboard then pretty much everybody’s price would just be changing anyway because it’s just pretty much almost everybody.

Lisa:            Yeah, I think you’re exactly right.  Conditions like mild anxiety, you know, they’re a healthy response to everyday stressors, especially all the disruption we’ve been through just with the pandemic over the past couple of years.  So that’s not something that an insurer would increase their base price for normally.  So it’s really about the more severe, the more persistent mental health conditions.  So that’s where underwriting ratings are typically used to adjust the price in line with that additional risk that the data are showing is there.  So – I mean, setting that approach you can appreciate is quite a collaborative effort between actuaries, underwriters like Fraser and also medical experts.  So it’s all about, you know, taking that data from the medical and health literature and then assessing from that data what is the elevated mortality and morbidity risk for these different mental health conditions?  So, you know, population level studies on different mental health conditions such as anxiety, depression, bipolar disorder and many others – so it’s about delving into that data and looking how elevated mortality is for those groups of individuals with that health condition compared to those individuals of the same age and sex without that particular health condition and that’s how that then links into that underwriting philosophy.

Kathryn:       Yeah, I was going to say, I wonder if it would be possible to – I know you were just mentioning a couple of other ones there, you know, potentially like the bipolar disorder side of things – because I think again, you know, when we’re talking about mental health, I think people who have maybe got a bit of anxiety, a bit of stress – they probably – you get a mix of people thinking it’ll either really affect things or people thinking, “Well it won’t because it’s just a bit of anxiety and stress.  Everybody has it.”  But then when you have something like bipolar disorder, I think a lot of people that – well, a lot of people I’ve spoken to – so I can’t say everybody – but, you know, a lot of people that I’ve spoken to with that condition, they’ve said, you know, they often – they do think obviously it’s going to really affect their ability to get insurance and especially the pricing and I think a lot of the time people – when they apply they do understand and expect that the pricing is maybe not going to be the basic pricing.  Maybe because of things in terms of the medical history that we often see with people who are living with bipolar disorder.  But it would be quite good if you could maybe take something like that and maybe do a little bit of a deep-dive into it and just explain maybe that one a little bit further if that’s okay?

Lisa:            Yeah, of course.  So in terms of the bipolar disorder you were mentioning, so one recent study comes to mind that looks at the mortality risk for well-managed bipolar disorder – so even for well-managed conditions, so that will be things like an individual is in employment and they’ve not been in hospital in the past five years and they’ve not got a history of self-harm as well in some instances as well.  And of course, you know, good compliance with medication, regularly engaging with their medical professionals which, you know, is really important to be able to have that engagement and to be able to credit customers that do engage actively in terms of seeking treatment and managing their condition.  So for that well-managed bipolar disorder there’s a study based on the UK population that shows that, you know, even under those circumstances, the mortality risk for individuals is about – just less than double than would be typically expected for someone in the general population with the same age, same gender as that individual but this individual has well-managed bipolar disorder compared to people in the general population that don’t.

So just putting that in really simple terms, that translates into the chance that someone with that bipolar disorder of passing away, it’s twice as high as the general population so if you think about that from the insurer perspective, the insurer needs to allow for this additional risk in the pricing for the customer so the standard price that an insurer would use for the general population, that’s not including this additional risk that’s attributable to the bipolar disorder.  So that’s where the insurer would come in and use an underwriting adjustment to increase the customer’s insurance premium to allow for that additional risk.

Kathryn:       Okay, I think what’s important as well when we’re sort of like saying this, you know, obviously, thank you because, you know, it’s – I think it’s stuff like the data that, you know, I have to say, I’m always – I’m not a data person but I think sometimes, especially in this situation, you know, the data is obviously really important to hear.  But I want to say that if anybody is listening and they have a mental health condition like bipolar disorder, you know, please don’t, you know, I really hope that this doesn’t make you feel unsettled at all but it’s just something that the data is showing.  It doesn’t mean that it would be you as an individual and certainly not you and your circumstances but it is just something that is generally being shown by the data that is being able to be accessed by the insurers at the moment.

I think it would be really good to maybe have a bit of extra clarity here as well – so in terms of, you know, we are talking there about saying it’s, you know, that there is potentially a higher risk of somebody, you know, at the moment we’re talking about life insurance – so the higher risk of somebody that’s living with bipolar disorder, of them dying.  It would be good to know maybe a bit mor clarity – and this is outside of my realm but probably where Fraser, you could come in please – sort of like explain what that is?  Is it kind of – in my mind from probably – obviously I’m not an expert in bipolar but from my little knowledge in a sense, I think it’s maybe probably going to be a long-term effect of the medications or potentially even – potentially an increased chance of attempting suicide?  How does that – how is that kind of mortality kind of pictured, Fraser?

Fraser:        Yeah, I think you’re on the right tracks there, Kathryn.  I mean, the data does tell us that one of the main risks with a condition such as bipolar is suicide unfortunately.  We do also know that having suicidal thoughts is a depressive symptom of having bipolar disorder.  When we look at studies, we can see that up to 50% of all people living with bipolar disorder do attempt suicide at least once in their lifetime.  We’ve also seen research showing the risk of suicide is up to 15 to 20 times greater for people living with bipolar disorder compared to the general population and I think when you’re presented with that kind of data, from an underwriting risk perspective it’s clear that the underwriting outcomes need to reflect what that’s telling us.  There are other factors in there such as increased cardiovascular risks and hopefully we’ll be able to touch on that a bit later on if that comes up again.

Kathryn:       Yeah, absolutely.  No, I’m sure we can definitely make time for that because I’d be really interested in terms of that.  Again, I’m assuming possibly some kind of – I don’t know, lifestyle and kind of medication risks that would come into there that would sort of lead to the cardiovascular – I could be completely wrong.  I’ll stop wittering there and trying to guess.  I’ll let you take that away, Fraser.  But no, I think that is really interesting.  I know that a lot of people again that I speak to that come to us for help – we tend to find that, you know, there has been some kind of a suicide attempt at some stage.  We tend to find – and obviously I’m not saying that I speak to everybody in the UK who is living with bipolar – we tend to find people who have had suicide attempts, it’s maybe something in their teenage years before they’ve been medicated, before they’ve actually been able to establish what’s obviously happening – what’s going on.

But obviously I suppose, you know, there are probably a lot of people who have later stage diagnoses as well as the condition without necessarily getting that support beforehand as well and I imagine, as you say, it all comes down to the management and different things and obviously lots of things that are out of control like especially the pandemic.  You know, I imagine – well I know personally for a lot of people even who didn’t start out with a mental health condition have found these last two years have put them in a not positive place and so – and I think there’s kind of like a mix because as someone with mental health myself, I kind of feel like I’ve been able to weather it quite well actually because obviously not meaning to be again flippant at all – but my natural tendency to be a bit agoraphobic has quite liked not being – not being able to go out and not going out places.  But then that’s going to have a knock-on effect later on in the fact that when the world does open up again properly, I need to go back out again.

I’m not saying that I haven’t been out.  I’m not saying I’m back to being agoraphobic but there’s so many connotations as to what’s happened the last few years and I think we need to take that onboard.  But Lisa, I think when it comes to like actuaries and underwriters, sort of like the latest evidence that’s available and different things like that, there’s all about – and it’s to do with as well like the ABI which is our Association of British Insurers and certain standards that are set with us as well?

Lisa:            Yeah, so the ABI and the mental health standards that have been published do a great job at emphasising that insurers need to use the latest evidence available and make sure that they’re always looking out for that latest evidence and reflecting it in the underwriting philosophies so that we can be accountable for customer decision-making and making sure that we’re always doing the best by our customers.  So that’s really important and you mentioned a lot of the disruption in terms of the Covid-19 pandemic recently and potential impacts of that on mental health.  So from a data side, what’s important to note is that, you know, these effects – they’re going to take a long time to be borne out and seen in the data so the number of people that would be needed in a research study needs to be large enough for that data to be reliable and it takes time for that data to be collected and also takes time to look at the longer term and to see how that impacts on individuals’ risks over, you know, five, 10, 15 years.

So I think what’s also important though is even sort of without that population data emerging, so that’s yet to come over the next five, 10, 15 years – there are new treatments that are being developed all the time for mental health so it’s really important to stay close to the medical professionals and adjust that data so that we can allow for these new ways of treating mental health in our underwriting philosophies where we can see that there’s potential for them to have a positive impact in terms of improving the outcomes for customers that do have a mental health condition.  So, you know, in some cases for individuals – yeah, so in that sort of case, you know, lifestyle, interventions, protective factors that we’re starting to know can provide, you know, critical tools in terms of an individual and their response to mental health conditions and managing and living with those mental health conditions.  There could be opportunities perhaps to take that into account or – and really to be led by the medical profession make sure we’re always – yeah, doing the best we can for the customers in terms of their latest treatment approaches.

Kathryn:       Brilliant.  I mean, I think – sort of like, I mean obviously that’s fantastic Lisa, to sort of like hear that there is that constant collaboration because I think sometimes again there’s maybe that thing of saying, “Well insurers are over there doing their thing, they don’t know what’s going on,” but to hear that they are speaking with the medical experts and I know that’s probably something that inside the industry we know that there’s medical experts being gained – being accessed all the time and I think that’s not necessarily always translated out into the bigger world but it would be good to hear how things work from like the actuary – so obviously Lisa, you’re there, you’ve been doing all this analysis.  You’ve been working with medical experts, you’ve been putting all this kind of data together to say, “This is what’s been happening,” and it would be good to know then how that kind of then translates to the underwriting development team Fraser, and kind of like you’re building your manuals.  How does it – how do you go from that data to then go, “And this is what we’re offering,”?

Fraser:        Yeah, well hopefully I can articulate this as clearly as Lisa has – that’s a hard act to follow.  I think from our perspective, the reinsurer tends to build the underwriting manuals and as the insurer we’ll use these to assess the applications and the medical information that comes in through the process.  My understanding is that they start by looking at the outcomes of the medical and health studies which Lisa has referred to earlier and this is across the various mental health conditions which we’ll see.  It is important that the studies are of sufficient quality, size, diversification to make it reliable and robust enough for us to be using it.  And I think it’s important that we do acknowledge at this stage that these studies are based on the general population outcomes and not just the insured population.  I think that’s a key point.  We then have to make some adjustments using established data that we do have regarding the insured population versus the general population.

This essentially means that insurers can disregard some of the small increased mortality or morbidity that comes up because this is captured within the base price charged on the policy.  Essentially, in real terms – in terms of the customer, this means with very mild health concerns shouldn’t require an increase to the premium – this being charged to the base price.

Kathryn:       So that’s kind of going back to what we were saying before with Lisa in a sense.  So your mild anxieties, you know, sort of like your milder health conditions are kind of just absorbed within the, “Well this is kind of like what’s happening with the majority of the population so we can’t really charge for it,” kind of thing.  “This is just the base price.”

Fraser:        Yeah, as long as we know what’s been accounted for within the base price and we can disregard that when we come to making underwriting outcomes because all these things are pooled together and I think that’s the important part and I think it’s probably worth just having a brief point at this stage that just pointing out that protection insurance is about the pooling of risk.  Essentially, what this means is that we may have some very healthy customers that pay a little bit more than their risk and some not so healthy customers paying a little bit less than their risk but overall the aim is to provide cover at an affordable premium to all the customers that want to take protection out.  So despite insurers or reinsurers wanting to offer individual outcomes, the guidance for mental health when it comes to underwriting needs to be reflecting on the range of people within the study cohorts.

I think that’s really important to remember.  I think it’s also important to remember that unlike general insurance policies that tend to be on a one or two-year renewal basis, protection plans tend to be long-term, you know, and underwriting outcomes – they are decided at the outset with no planned review period, regardless of whether the condition was to improve or deteriorate and that tends to be not limited to mental health, that’s to all conditions that have been assessed as an underwriter.  Therefore, I think the data we use needs to have identified medium to long-term indicators to ensure that our underwriting outcomes are accurate and fair.  This means that the studies we use have to include a large number of people with the condition otherwise outcomes can be skewed or actually wrong –

Kathryn:       Yeah.

Fraser:        Which would not be good for anybody.

Kathryn:       So I think, you know, in terms of that long-term thing – just to clarify again for anybody who’s listening, like who’s not really familiar with, you know, the insurance side – so if we talk about life insurance or critical illness cover, income protection, anything like that, so things in the protection market not in the general insurance market like you mentioned, so in the protection market, you know, if we’re speaking to somebody in their 20s, they could take out an insurance policy that lasts, you know, anywhere up to, you know, obviously it could be their retirement age, so probably their late 60s.  They could potentially take it out for the whole of their life which means it just keeps going and never ends.

So in a sense the insurers – I always try to say to people this way, you know, “It’s a snapshot, the insurers are taking a snapshot of your life and you, your health and everything else that’s factored in on this day and just that you’re taking, you know, you’re trusting the insurer based upon their terms and conditions and the key features and everything on that day you start the policy and they’re doing the same with you.  So they have to kind of – they factor in your health now but they also have to take in general kind of factors anyway, whether or not that would be a case of, “You’ve got absolutely no health conditions.  It’s predicted you’re not going to have anything, you’re just in a sense naturally going to pass away in your 70s or 80s.  You know, it all needs to be factored in in some stage.”  But, you know, we are talking here about things that, you know, because once the insurer offers this policy as well, they can’t just suddenly take it away.  You know, it’s there, it’s a contract.  If you keep paying your premiums then it’s going to be there for the next 40, 50 years or so.  So it’s kind of – it’s kind of impossible to kind of quantify and predict isn’t it in some ways?

So as you say, it has to just be – obviously it’s very, very complex but I know you’ve got some examples haven’t you about how it works?

Fraser:        Yeah, I think if we take a simple example, you know, if we use the study of 10 people with stress, the data could suggest that all outcomes are standard so no adjustments to the terms are needed.  But if that study is increased to say 100 people, then the next 90 people from those first 10, their outcomes may suggest an equivalent outcome to 150% rating.  This is why I mentioned earlier that the studies have to be of a sufficient size to be used because that gives us a broader range of potential outcomes.

Kathryn:       Yeah.

Fraser:        Now the studies that we do use will be larger than 100.  I mean, they’d have to be a reasonable size but it just gives an example as to, you know, you need a large data because the initial person may just show one thing but as you go further on they can show different outcomes and I think that’s really important to make sure we’re using the right data.

Kathryn:       Absolutely and I just want to clarify as well just for people so in terms of – I know you said it would be known as what’s known as – in the insurance world we’d say maybe a plus 150, you know, 150%.  So as an example for somebody and I’m going to try and make sure I do my maths right here because I really don’t want to get it wrong, especially with you people who are so numbery.  So if it starts off the base premium was something like £5, 150% would mean that we would multiply that premium by 2.5 – there, I almost got it wrong – multiple it by 2.5 because the initial £5 is classed as in a sense 100 so an extra 150 would then make the premium £12.50.  So that’s a good example in terms of like the premiums.  Like I was saying before about how it doesn’t mean it’s going to become ridiculously expensive if you know that it’s going to be pricey, obviously no matter what, £5 is nicer than £12.50 but ultimately if the price is going to increase, don’t always assume it’s going to become unaffordable or that it’s going to – I know some people can feel a little bit sometimes offended by the premium changes.  It’s not necessarily going to potentially get to a level where you think, “Well that’s an offensive level of an increase,” or something.  It’s always worth looking at, but no Fraser, that’s really good to sort of like know that.  But sorry, carry on, I know I’ve interrupted you.

Fraser:        It’s alright.  I think it’s good to get the example out there.  I think in terms of the data, it’s also broken down so, you know, it can be utilised for application questions and the information that we want to obtain from the medical professionals so the information we obtain can then be easily used by underwriters to determine the right underwriting outcomes.  This thing goes further and gets filtered out for the various mental health situations which we’ll have such as bereavement, anxiety, stress, depression, schizophrenia, bipolar disorder and any of a combination of the above to be honest.  And I think what happens then is the underwriting manual will create decisions based on the key information and for the mental health conditions and that includes areas that are really important for underwriting such as when the individual first had symptoms, the type of treatment they may be having as well as any recent changes to treatment.  We also look at things such as the amount of time off work and as well as any self-harm and/or suicidal thoughts or attempts.  So those are some of the key information that underwriters will start to look at.

We also have the added complexity – we see this regular, that customers can suffer from more than one mental health condition and the symptoms and/or the treatment can overlap.  That’s when underwriting manual outcomes do encourage the underwriter to really take a holistic view and not just look to assess each individual condition.  When you overlap it becomes a lot more complex for the underwriter to do but often, you know, the guidance will just ask the underwriter to simply assess this customer using the more severe condition.  We disregard the milder one and we’ll just go down the one that, you know, is possibly a severe condition.  There is overlaps but that will generally be where we will go.

Kathryn:       I imagine that that kind of also comes down to a little bit then of, you know, I think with some things, you know, probably with the underwriting, there is a little bit of a black and white type thing where it’s just like, “Right, you’ve got this, this is the answer,” kind of thing.  But it sounds like here it becomes much more, you know, that’s absolutely when we really need to sort of like the person underwriter not kind of like, you know, we do have underwriting engines that will be able to – some of those black and white situations that they can kind of kick in and make quick decisions but, you know, with this complex of –  It sounds like it really needs somebody, in a sense Fraser like yourself, you know, someone from your team to sort of like sit there and go, “Right, you know what, I need to see the person here and see what’s going on and really understand what is going on with this specific individual.”

Fraser:        Yeah I think you’re absolutely right, Kathryn.  I mean, if you take it to a different condition for example high blood pressure or diabetes, we know what is considered to be a normal blood pressure reading.  We know what is considered to be a normal, you know, HbA1c result for a diabetic and we can then incrementally go up when they rise to create an outcome.  Mental health is slightly different.  It’s – and I think it’s a very – more emotive subject to discuss the underwriting of mental health but what we are looking at is that’s when we do need a human often to look at it and just try and take a real holistic view and look at what would be a positive factor and a less positive factor.  But an underwriter always has the ability to use all the information they have to determine the outcome.  Even if that is more detailed and more granular than the guidance within the manual and that’s when the experience and expertise of the underwriter really comes into play.

You’ve got to balance that medical history and come to a fair decision but I think ultimately the important factor is that we genuinely need to ensure that whatever the final underwriting outcome is, it’s correct, it’s fair and more importantly it’s actually proportionate to the risk and that is really important.

Kathryn:       Absolutely and I think that’s so important and something that obviously as well some listeners may or may not have experienced, you know, I’m somebody who’s experienced – again I’ve not been shown this but the letter that said, you know, “I wasn’t able to get the insurance,” and quite bluntly said that, you know, “It was due to your mental health,” which it does then have – there’s no point hiding away from that.  It’s essentially saying, “We think that at some point, you know, your mental health is going to spiral to such a level that you’re going to want to not be here anymore and take action on that.”  And I think what’s good is that there has been so much work and there is – and I’m not going to say that it’s perfect in any way, shape or form at the moment in the industry but there’s been an incredible amount of work being done at the moment about how these decisions – like you say these – that they’re correct, fair and proportionate – how these decisions are then – that’s conveyed to people and how it’s being discussed just so that people are making sure that when we’re giving this kind of information out to somebody on the decision.

If they don’t have somebody like myself, like an adviser there who’s kind of like the middle person to discuss what’s gone on, we can then obviously – sort of like there can be some kind of a decision there that the insurer can sort of say very clearly as to what exactly is happening rather than it just being quite broad statements which I think can be quite difficult.  Because, you know, obviously if you do get a letter that just says, “You can’t have insurance because of your mental health,” that is very, very broad.  And sort of like for it to maybe be more detailed is really good ‘cos then that adds to kind of that transparency, the fairness to what people are hearing.

If I can just go back to you for a minute, Lisa.  So as an actuary, I know obviously you have so much data that you’re looking at.  I can’t even begin to fathom how much data you look at and put together but I suppose in terms of the mental health, what kind of data would you love to have in front of you?  What kind of data do you need to have to be able to really analyse mental health statistics more?

Lisa:            Yeah, I think that’s a great question, Kathryn.  So more granular data, more recent data on outcomes for a wide range of mental health conditions, you know, mental health conditions cover a really broad spectrum and even, you know, within a specific condition there’s such varying levels of severity so data that can really capture that would be very helpful and also I think Fraser touched on this as well but capturing other risk factors.  So the age at which someone was diagnosed or, you know, duration of any relapses if they have had recent relapses, capturing that within the dataset as well can be really helpful.  I think another area as well is finding ways to quantify some of the biopsychosocial factors that Fraser was touching on, so that support network and the proactive engagement that people do undertake in managing their mental health.  If we could capture that within a dataset then we could start to really have a data-driven approach towards, you know, setting underwriting approaches for this.

Underwriters do a fantastic job at getting really close to all of that so if we can actually collect the data together as well in terms of going forwards and getting more data – more recent data across a range of severities, that would be really helpful.

Kathryn:       Fantastic and I think, you know, obviously I think that kind of sounds like it’s quite standard in a sense, you know, you kind of think, “Well, you need that,” you know, to be able to do this and I think that’s good.  You know, make sure that we sort of like – as an industry that we try and get as much of sort of like outreach to so many areas we can get that data from.  I think Fraser, what are the kind of things that are happening right now in the underwriting world to try and improve access to insurance for people that are living with mental health conditions?

Fraser:        That’s an interesting question, Kathryn.  I mean, I think in the last few years mental health has become a huge focus both within our industry as we all know and in the wider world.  There’s a lot – it seems to be spoken about a lot more, it’s a lot more open and honest.  I think it’s happening and I think it’s a great thing.  I think in terms of our industry, the main piece of work recently for insurers has been working to implement the ABI mental health standards throughout 2021.  This means that realistically customers should have for example two or more choices of how to communicate with an insurer and the insurer should be supporting customers by having processes in place for those that need assistance to complete the application process.  And I think that’s really important and insurers also need to be including an introduction to the questions, explaining the process and making it clear the importance of answering the questions accurately.

One of the other aspects of the ABI mental health standards was ensuring that all questions can be answered without medical knowledge.  Essentially what this means is that the words insurers are using, they must be easily understood by everybody and that’s really key because I don’t know how you can answer a question if you can’t understand it properly and I think using clear, concise and non-technical words when possible really does help that process for the customer.  It is more relatable and I think it just allows customers to feel comfortable answering questions hopefully.  And I also believe that overall this work will have a positive knock-on effect for mental health underwriting with more customers that have mild conditions such as anxiety, stress, depression being accepted on normal terms.

Kathryn:       Yeah.  I think that’s – obviously anything we can do is obviously incredibly positive and, you know, I’m sure it will continue to keep evolving.  Something I’m going to sneak in here just ‘cos it’s something that I always wonder about and while I’ve got you here I’m going to ask you if that’s okay.  So when I’m doing income protection for somebody with a mental health condition, I know that it’s going to have – well most of the time it’s going to have a mental health exclusion.  On the basis that – again, for anybody who’s listening who’s not familiar, with income protection, it is one of those policies where I think it’s fair to say for most things – if you’ve had something before, it’s not going to cover you, or if you’re living with something, it’s not going to cover you for that claimable event because you already have it.  So it would be a case of the insurer can’t you insure it for you to then half an hour later say, “Okay, I’m going to claim on it.”  And that’s kind of like saying it in a very, very sort of like quick and basic way, you know, obviously.

But in terms of like with mental health – so one of the things and even I struggle to get my head around this sometimes is if somebody has got anxiety and depression, you know, we can get them potentially income protection with a mental health exclusion but if somebody has a stronger mental health condition like bipolar disorder, schizophrenia, borderline personality disorder, they can’t get – in most areas in the personal protection space – I’m being very careful with my wording here so if anybody is in that situation, please don’t think you can’t get these things, there’s certain circumstances where we can so please don’t assume no.  But in the personal protection space, with a lot of insurers you can’t get income protection even with a mental health exclusion and I know there must be something behind that Fraser, as to why?  Are you okay to kind of go into that for me please?

Fraser:        Yeah, I think – this is a question that comes up a lot because as you say we, you know, we do see a lot of customers with anxiety, stress, depressive history and the can often get cover with an exclusion, as you know.  I think it comes back to the data again and I think this is crucial when we have some of these outcomes is the research data confirms for conditions such as bipolar or schizophrenia or severe mental illnesses that there is an increased future risk of other conditions if the customer has a severe mental illness.  So, one of the areas we do see is an increased future cardiovascular risk.  Now, we also know that income protection claims arising from mental health or cardiovascular conditions in their own right are sizeable across the industry.  At the time of underwriting, the customer who has a severe mental illness condition may not have risk factors for future cardiovascular events but the data tells us these will present themselves or can present themselves further down the line.

So this goes back to when we were talking about longer term contracts you can’t re-underwrite again at some point.  So as an example, the NHS long-term plan that came out I think it was 2019, estimated people with severe mental illness have a 53% higher risk of having cardiovascular disease at some point.  Now, what we also see is higher than recommended alcohol consumption within this group of mental health conditions.  Now, the alcohol in isolation, Kathryn, might be a standard decision outcome but when you combine that with a severe mental illness it does become a significant concern for the insurer.  If you link it back to the earlier comment on increased cardiovascular risks, there is also a potential for higher than normal alcohol consumption to result in things such as high blood pressure and/or heart rhythm conditions.  So if as an insurer we simply exclude your mental health from that contract, we really wouldn’t be offering an outcome that represents a potential long-term risk.

Kathryn:       Yeah.

Fraser:        So surely it doesn’t represent what the data would say could happen in the medium to longer term.

Kathryn:       Yeah, and I imagine this is one of those times where it’s really hard for people who are in that situation, living with those conditions who in a sense don’t drink alcohol, who are doing, you know, so many positive lifestyle things and it must be very, very frustrating for them because obviously they are going to face this wall of trying to – and as I say, we’re not talking about all insurers here, we’re just talking – at the moment we’re talking about an exclusion here.  Let’s just be very clear.  We’re talking the about income protection side of things, you know.  If you’re going to get life insurance and critical illness cover, you wouldn’t usually get an exclusion for mental health on those but with the income protection side this is where you’d maybe find that it’s more tricky in terms of getting the cover and it’s, you know, it must be really hard because as you say, you’re having to go as a business, you know, you are going by – and insurance is all about risk – and you are going by what the data states and unfortunately that is obviously what the data is leading towards.

But maybe hopefully – whilst anybody listening with those conditions might find that – they might find that frustrating, you know?  It might actually make them feel a bit sad.  You know, and some of them might even feel a bit angry obviously to be lumped in with the general population.  I hope that it’s a clear example as to why these decisions are there at the moment.  Obviously we’re not saying that this is going to be something that’s going to continue being the way it is forever ‘cos obviously things change so often in the insurance world but for the time being, that’s in a sense the best way that insurers work at the moment is using those general population statistics and data and that’s what they are working from.  Thank you Fraser, that was really, really clear for me.  So thank you.

Fraser:        It’s alright and I think you make a valid point though Kathryn, is that, you know, the likes of Lisa and underwriters, we do continue to look at the data that comes out.  You know, it doesn’t stand still, you know, we do look at data that comes in and what’s happening again and then these things are reviewed but at the moment in time this is what the data tells us so then we have to work with that.

Kathryn:       Yeah, absolutely.  So Lisa, I think a good thing to sort of like talk about to round off this session is something that you would both hope to see.  So Lisa and then Fraser maybe, just a short summary of something that you would both hope to see as a change going forward, you know, kind of like what would be your – if you had to choose one, it’s probably hard to choose one but if you had to choose one, what would be your wish in terms of mental health and insurance?

Lisa:            Yeah, I’ve got at first a hope and then a wish.  So in terms of the hope, so Fraser mentioned how data needs to be of a sufficient size so maybe having enough data for actuaries and underwriters to be confident in the findings.  So my hope is for more collaboration across the industry to really pool this mortality and morbidity data together across a wide range of mental health conditions and that sort of data, it’s important to help further refine the underwriting.  As Fraser said, we’re always looking to take into account the latest data and use new rich insights and in particular for more severe but lower frequency mental health conditions that’s where, you know, it’s really important to have that industry collaboration but of course competition is very important as well.  So having a central body such as the CMI or the ABI that can, you know, anonymise that data and take the lead on this sort of approach, that would be a potential really great route forward.

And in terms of my one wish, so this is yeah, probably more of a longer-term one so it is a wish – is I’d love to see the industry working towards finding ways to account for those more protective or positive factors when underwriting individuals, sort of account for it from the data side leading that accounting for it.  So, you know, finding ways to use some of the newer technologies that we’re getting more familiar with in recent years such as tele health services, health apps, potentially even wearables to actually be able to provide a positive credit for those individuals where they do have positive lifestyle behaviours that may mean that they’re, you know, that we can take a different view in terms of their underwriting outcome than the sort of standard population study that’s been used to set the underwriting approach up to this point.  So, yeah I hope that will be able to broaden coverage so further increase access and affordability of insurance for those with not just pre-existing mental health conditions but a wide range of pre-existing health conditions.

Kathryn:       That sounds amazing, Lisa.  I think that would be a lovely thing for us all to wish and work towards obviously.  And Fraser, what would be your wish?

Fraser:        Yeah so I’ve got a couple of things.  I think as we move forward – if we stick with the mental health discussion, I genuinely would like to see mild to moderate mental health conditions have more decisions being given without the need for insurers to access the medical records.  I think that means some improved questioning for customers and I think possibly, you know, even starting to look at utilising some of the lifestyle things which Lisa has referred to and I think we can start to use some of those as we move forward.  But it’s trying to have enough data to make sure that those are accurate.  And I think when we do need to see medical records for mental health conditions, I would like to see the industry do this quicker or find a more efficient way.  You know, at Zurich, we support iGPRs and this does result in quicker return times, you know.  As an example our more recent data suggests that we receive iGPRs back twice as quickly as a traditional GP report and I do think those type of things can help.  We know the longer an application process takes Kathryn, you’ll be able to tell us more than anybody else –

Kathryn:       Yeah.

Fraser:        The longer it takes to get to that end stage of offering terms, the least likely the customer is to still continue to accept those terms because it’s a longer drawn-out process.  So the quicker we can make decisions, the more customers we as an industry can cover and I think that’s really important.  And I think moving away from mental health, I think it would be great to see the industry work together to encourage customers and advisers to explore different sums assured when rated terms are offered.  I mean, I think for example if a customer has a budget of £40 and this gets them, I don’t know, say £350,000 of life cover but once the underwriting process happens and we have an outcome, that means that that level of cover is unaffordable, it would be really encouraging to see the customer retain a smaller sum assured but still within their budget. I think this goes back to the old saying of – when I first started in the industry, you know, “Some cover is better than none.”  And I’d love to see us trying to – the industry work a bit closer together to really have those outcomes for the customer.  I think that’d be great to see.

Kathryn:       Yeah, absolutely.  I think that would be fantastic.  I think, you know, as an adviser in a sense I kind of think, “Well isn’t that being done anyway?”  And it’s – in a sense, you know, because to me that is exactly what I would do.  I always say to – well my approach is to say to people, “We’re going to go for the all-singing, all-dancing version.  Let’s see what the price is and then if not, we’ll work to what the budget is in a sense.”  And I would hope that that would be something that at least advisers are doing but it would be really good to see that through other routes as well, you know, if somebody is going direct – if somebody is using maybe a non-advised route.  You know, it would be really, really positive to see that as kind of like a mentality that we all take onboard because as you say, it is absolutely better to have something than nothing.  There’s so many – that’s probably a bit of a podcast on its own as well in terms of how we could discuss that in terms of obviously bringing in life, critical illness and income protection.

But that’s – thank you so much both of you for going through all of that.  It’s really given me a good understanding of kind of like how these decisions are made, how they’re then translated into what I see as an adviser and also as well just a lot of that base information that kind of goes, “Well, but why?”  As a customer, if I was coming to you guys and saying, “But why have you done this?”  I feel like this has given a real kind of like – obviously I’m sure it’s far more in-depth and there’s lots more that we could discuss about each condition, but it just feels that I’ve got a really – a much better understanding as to why something has happened based upon the way that the industry is working at the moment.  So thank you both so much for joining me.

Fraser:        It’s been great.

Lisa:            Thanks Kathryn.

Fraser:        Thank you very much.

Kathryn:       Lovely, lovely having your insights.  So thank you for listening everybody.  Tomorrow I’m going to be back with Vanessa Sallows from Legal & General and Monica Garcia from Monica Garcia Consulting, talking about mental health and claims in insurance.  If you would like to have a reminder of the next episode, please do drop a message on social media or visit the website practical-protection.co.uk and don’t forget that if you’ve listened to this as part of your work, that you can claim a CPD certificate on the website too thanks to the sponsors, Octomembers.  Thank you so much guys and I’ll speak to you soon.

Episode 4 - Access To Insurance

Hi everyone, this is the third episode of our Mental Health in Life Insurance week. We have quite an unusual episode today, in that we have an adviser, actuary and underwriter all sat together to talk about insurance. It’s not often that you get such a broad insight of the industry all in one place.

We are talking about how insurers decide who can have what insurance and what price it will be. Actuaries take a look at huge amounts of general population data and analyse this to help them determine what might happen to these people in the future. They use data to produce statistics about how likely it is that person A that is X years old, will become seriously ill or die.

It is then the role of the underwriting developers to look at this data and decide what risks an insurer can and cannot take. For mental health this could be looking at the data on mild anxiety and deciding that the insurer can accept someone that lives with this at ‘normal’ terms (the basic premium). Or it might be that they look at data that shows that some conditions are linked to a statistically higher risk of ill health or death, with the decision to then charge a higher premium to.

The key takeaways:

  1. Insurers take broad population studies to understand how certain circumstances influence a person’s chance of being seriously ill or dying. This is then used to form many of their decisions, but they will also do what they can to listen to individual circumstances.
  2. An explanation as to why bipolar disorder is a condition that usually results in an increased premium for life insurance, and leads to some difficulty in getting income protection cover.
  3. A clear example of how a premium might be increased for life insurance, due to a mental health condition.

Without going into a deep data chat this episode helps us to see how insurers come to their decisions, based upon the way that the industry works at the moment, and upon the data that is available now. It’s always important to remember that underwriters are regularly reviewing what an insurer offers, and what is or is not available today, could change tomorrow.

We have Vanessa Sallows (Legal & General) and Monica Garcia (Monica Garcia Consulting) with us in our podcast tomorrow to discuss what mental health support there is for insurance policyholders before, during and after a claim.

Remember, if you are listening to this as part of your work, you can claim a CPD certificate on our website, thanks to our sponsors Octo Members.

If you want to know more about how to arrange protection insurance, take a look at my Protection Insurance in Practice course here.

Kathryn:       Hi everybody, this is episode four of season five and I have Fraser Ballantyne from Zurich with me and Lisa Balboa from Hannover Re.  Hi!

Fraser:        Hi Kathryn and Lisa.  Hi everyone.  It’s great to have finally made it onto this podcast after listening to so many episodes myself.

Lisa:            Hi Kathryn!  Hi Fraser!  Hi everyone, I’m really pleased to be with you all today.

Kathryn:       It’s lovely to have you both on.  So we’re on day three of our mental health and insurance awareness week and we’re now going to be focusing on mental health when it comes to underwriting and product development.  This is the Practical Protection podcast.  So both of you, obviously we’ve got you both here.  It’s not usual that we’d have a situation where there’s like an adviser that can sit down and like really go into the minds of an underwriting development person and an actuary, you know, we don’t tend to just generally get this.  So I’m not going to – if it’s okay with you two, we’re not going to go into too many pleasantries, we’re just going to get straight into it ‘cos I know there’s so much in your minds that could really, really be useful here.

So one of the things we’ve had like when we talk about mental health and insurance, you know, obviously from an adviser – from a consumer point of view, we do have so many times where we’re kind of like – it can be hard sometimes to kind of follow the decisions and I know that there’s logic behind them in a sense and also it can be quite hard in some ways because the logic can sometimes feel it goes against our emotions and things like that.  So I feel – but ultimately as well, insurers are businesses and insurance in itself is a risk-based thing and that is ultimately what we are doing and what we’re looking at.  So in terms of mental health, I know we’ve seen so many developments over especially the last 10 years.  I know, I’ve never been shy about what I went through when I applied for insurance 10 years ago when I first started with the life insurance.  I had all but two insurers decline me because I was living with generalised anxiety disorder and I’d had a couple of bouts of agoraphobia.  And I think probably – I know the agoraphobia is something that – isn’t something that everybody experiences obviously but like the generalised anxiety, I think a lot of people can have anxiety and it can be – that can kind of lead to a worry hearing a story like mine where it was a case of, “Well I was declined by quite a few.”

But even I can see, from what I’ve then experienced further going on where I wasn’t obviously – a few years ago when I redid my insurance, I wasn’t declined by everybody.  There was a lot of options and from the people that I help there are so, so many options now and it’s amazing to see what’s happened in the last 10 years.  But I think a really good place to start off would be to talk about how – because I don’t understand this myself.  Obviously I know what you each do but I also don’t know what each of you do in a sense.  I know I fully don’t understand what you get up to in your day-to-day lives.  But in terms of like mental health data and how it’s analysed, how those decisions are made, you know, what – how is that done?  How does that outcome kind of happen in insurance?

Lisa:            Yeah, thanks Kathryn.  I think hopefully I can unpack some of that logic that you were talking about there and really, you know, hopefully share some insights to everyone on this call.  Mental health, as you were describing, is so much more prevalent these days, so much more widely discussed.  So it would be really great to be able to explain that link of how we go from the data to the underwriting to the customer decision.  So let me unpack that a bit and – before I dive into the data, so as an actuary and I know that you know this about me Kathryn, I love the data side but I thought it’s worth just taking a step back and touching a bit on the underwriting process and Fraser’s an expert in that area.  So he’ll share lots more insights on the underwriting side later.  But in a nutshell, life and protection insurers have underwriting philosophies and these philosophies guide their customer decision-making and it’s the underwriting that sets the boundaries on which customers can be accepted for cover and on what terms.  So as you’ve mentioned Kathryn, we’ve seen quite an evolution of that over even the past 10 years in terms of what we can offer for customers with different health conditions and on what terms.

So, you know, as a customer applying for life insurance, it’s the underwriting that adjusts that end customer price and what’s important is that price is adjusted for factors that are connected to an individual’s increased mortality or morbidity risk or – just putting that in plain English, that’s those factors that potentially increase a customer’s chance of dying or getting ill.  You know, we’re not clairvoyant, we can’t predict any one person’s chance of getting ill or dying with absolute certainty but it’s about focusing on these averages and pooling risk together and understanding those factors that, you know, looking at a population level, there’s a higher chance of an individual dying or getting ill than someone without that health condition.

Kathryn:       So in terms of that when we’re sort of like saying, you know, you’re saying you can’t do it based upon one person.  You know, obviously, you know, we can’t do that, we have to take it upon the averages so in my mind I kind of – I’m quite visual so I kind of just see this massive database somewhere of – I don’t know, data from 10, you know, over decades’ worth of data, this kind of like – I can’t even imagine how much all this data is stored somewhere or how it’s even analysed but it kind of like says, “Right, all the people that were this age in this time period who had this, you know, the likelihood of – or this – the fact that, you know, this happened to so many of them that ended up with them being, you know, potentially more ill or developing a certain thing like cancer or heart disease and actually from this group as well, so many of them died.”  Is that kind of like a really, really basic way of kind of saying how that kind of data is gathered?

Lisa:            Yeah, you’ve put that really well so, you know, we need a large dataset there and it might not be sort of one giant dataset of everything together.  It’s about using the health and medical research that we have and population-based studies which are often on individual health conditions.  Sometimes it’s a big population study where there’s multiple health conditions that are explored but that data is there so the job of actuaries and underwriters is to use that data to then set the underwriting philosophy, so really be led by the data, be led by the medical community in terms of understanding those different risks when it comes to health conditions.

Kathryn:       Brilliant, thank you.

Lisa:            Yes, so these factors then – so it could be the mental health conditions, it could be physical health conditions as well and, you know, beyond health conditions it could be lifestyle factors such as smoking and alcohol.  It could be family history factors such as family history of cancer so the point of underwriting is to use all that data that underpins that to then adjust the price to allow for those material health and lifestyle factors that aren’t captured in the usual mortality assumptions that we as actuaries use to set the standard price of the insurance product.  So this kind of talks to your point Kathryn, earlier about that, you know, mental health is so prevalent.  I’ve seen stats where one in four people in the UK will experience a mental health condition at some point in their lives so that’s a huge prevalence so of course any mortality risk that can be attributed to these mild mental health conditions, you know, that will already be in the insurer’s standard life insurance price for typical, you know, risks that an individual would have in terms of any additional mortality or morbidity.  I mean, it’s already priced in, it’s already there.  It’s one in four – that’s, you know, 25% of us.  It’s a huge number.  So, you know, those conditions really wouldn’t – you wouldn’t expect anyone to be charged more for having those conditions.

Kathryn:       That’s really good and I think I was just going to say sort of like to kind of summarise that for people who are maybe not sort of like too familiar as well with how things work.  So in terms of like the insurance products and everything, obviously we all – there’s a base price, you know.  If somebody is a certain age, they’re a non-smoker, they want a certain amount of, you know, anybody regardless of their gender or anything like that, the price is the price in a sense and obviously if we’re talking about potentially increased prices it means that there’s something there that the insurer’s saying, “We think this might be a bigger risk of there being a claim on this policy so we’re going to increase the premium a little bit.”  And I think as well it’s always – a different podcast completely obviously because this is all about your technical minds but, you know, talking about those potential – what those increases can be, you know, sometimes they can be quite small actually the increases.  I think people sometimes think that if it’s an increase they’re going to suddenly – it’s automatically going to be really unaffordable.

But anyway, sort of like going back to that, you know, I think it’s important to just, you know, really catch on to what you just said there. So kind of like insurers now understand that, you know, anxiety and, you know, some stress – especially anything to do with like bereavement or just general life at the moment, you know, a lot of people are stressed.  We do live in a stressful kind of society.  Insurers understand that and are taking that onboard and if somebody does have, you know, some mild anxiety, some mild stress – to not in a sense – I was going to say not be worried.  I didn’t want to seem like I was being flippant to say that you shouldn’t be worried applying because obviously to each their own as to how they would feel, you know.  You’re potentially applying for insurance which is going to be very unusual for some people.  But ultimately to just be aware that insurers now are saying, “You know what?  Anxiety to a certain level is kind of normal and it’s kind of –”  We are – it’s a healthy reaction to certain situations as well as, you know, feeling bereaved as well as feeling stressed and they’re not going to be altering necessarily the pricing because someone has a bit of mild anxiety.

And I think that’s really important.  You know, there are certain points which I’m sure we’ll breach, you know, and sort of talk about a little bit to say there are times that the price is going to change a bit but what you were just saying there and is really important to hold onto is the fact that insurers are now taking this onboard as this is part and parcel of life for quite a lot of people now and if they weren’t taking that onboard then pretty much everybody’s price would just be changing anyway because it’s just pretty much almost everybody.

Lisa:            Yeah, I think you’re exactly right.  Conditions like mild anxiety, you know, they’re a healthy response to everyday stressors, especially all the disruption we’ve been through just with the pandemic over the past couple of years.  So that’s not something that an insurer would increase their base price for normally.  So it’s really about the more severe, the more persistent mental health conditions.  So that’s where underwriting ratings are typically used to adjust the price in line with that additional risk that the data are showing is there.  So – I mean, setting that approach you can appreciate is quite a collaborative effort between actuaries, underwriters like Fraser and also medical experts.  So it’s all about, you know, taking that data from the medical and health literature and then assessing from that data what is the elevated mortality and morbidity risk for these different mental health conditions?  So, you know, population level studies on different mental health conditions such as anxiety, depression, bipolar disorder and many others – so it’s about delving into that data and looking how elevated mortality is for those groups of individuals with that health condition compared to those individuals of the same age and sex without that particular health condition and that’s how that then links into that underwriting philosophy.

Kathryn:       Yeah, I was going to say, I wonder if it would be possible to – I know you were just mentioning a couple of other ones there, you know, potentially like the bipolar disorder side of things – because I think again, you know, when we’re talking about mental health, I think people who have maybe got a bit of anxiety, a bit of stress – they probably – you get a mix of people thinking it’ll either really affect things or people thinking, “Well it won’t because it’s just a bit of anxiety and stress.  Everybody has it.”  But then when you have something like bipolar disorder, I think a lot of people that – well, a lot of people I’ve spoken to – so I can’t say everybody – but, you know, a lot of people that I’ve spoken to with that condition, they’ve said, you know, they often – they do think obviously it’s going to really affect their ability to get insurance and especially the pricing and I think a lot of the time people – when they apply they do understand and expect that the pricing is maybe not going to be the basic pricing.  Maybe because of things in terms of the medical history that we often see with people who are living with bipolar disorder.  But it would be quite good if you could maybe take something like that and maybe do a little bit of a deep-dive into it and just explain maybe that one a little bit further if that’s okay?

Lisa:            Yeah, of course.  So in terms of the bipolar disorder you were mentioning, so one recent study comes to mind that looks at the mortality risk for well-managed bipolar disorder – so even for well-managed conditions, so that will be things like an individual is in employment and they’ve not been in hospital in the past five years and they’ve not got a history of self-harm as well in some instances as well.  And of course, you know, good compliance with medication, regularly engaging with their medical professionals which, you know, is really important to be able to have that engagement and to be able to credit customers that do engage actively in terms of seeking treatment and managing their condition.  So for that well-managed bipolar disorder there’s a study based on the UK population that shows that, you know, even under those circumstances, the mortality risk for individuals is about – just less than double than would be typically expected for someone in the general population with the same age, same gender as that individual but this individual has well-managed bipolar disorder compared to people in the general population that don’t.

So just putting that in really simple terms, that translates into the chance that someone with that bipolar disorder of passing away, it’s twice as high as the general population so if you think about that from the insurer perspective, the insurer needs to allow for this additional risk in the pricing for the customer so the standard price that an insurer would use for the general population, that’s not including this additional risk that’s attributable to the bipolar disorder.  So that’s where the insurer would come in and use an underwriting adjustment to increase the customer’s insurance premium to allow for that additional risk.

Kathryn:       Okay, I think what’s important as well when we’re sort of like saying this, you know, obviously, thank you because, you know, it’s – I think it’s stuff like the data that, you know, I have to say, I’m always – I’m not a data person but I think sometimes, especially in this situation, you know, the data is obviously really important to hear.  But I want to say that if anybody is listening and they have a mental health condition like bipolar disorder, you know, please don’t, you know, I really hope that this doesn’t make you feel unsettled at all but it’s just something that the data is showing.  It doesn’t mean that it would be you as an individual and certainly not you and your circumstances but it is just something that is generally being shown by the data that is being able to be accessed by the insurers at the moment.

I think it would be really good to maybe have a bit of extra clarity here as well – so in terms of, you know, we are talking there about saying it’s, you know, that there is potentially a higher risk of somebody, you know, at the moment we’re talking about life insurance – so the higher risk of somebody that’s living with bipolar disorder, of them dying.  It would be good to know maybe a bit mor clarity – and this is outside of my realm but probably where Fraser, you could come in please – sort of like explain what that is?  Is it kind of – in my mind from probably – obviously I’m not an expert in bipolar but from my little knowledge in a sense, I think it’s maybe probably going to be a long-term effect of the medications or potentially even – potentially an increased chance of attempting suicide?  How does that – how is that kind of mortality kind of pictured, Fraser?

Fraser:        Yeah, I think you’re on the right tracks there, Kathryn.  I mean, the data does tell us that one of the main risks with a condition such as bipolar is suicide unfortunately.  We do also know that having suicidal thoughts is a depressive symptom of having bipolar disorder.  When we look at studies, we can see that up to 50% of all people living with bipolar disorder do attempt suicide at least once in their lifetime.  We’ve also seen research showing the risk of suicide is up to 15 to 20 times greater for people living with bipolar disorder compared to the general population and I think when you’re presented with that kind of data, from an underwriting risk perspective it’s clear that the underwriting outcomes need to reflect what that’s telling us.  There are other factors in there such as increased cardiovascular risks and hopefully we’ll be able to touch on that a bit later on if that comes up again.

Kathryn:       Yeah, absolutely.  No, I’m sure we can definitely make time for that because I’d be really interested in terms of that.  Again, I’m assuming possibly some kind of – I don’t know, lifestyle and kind of medication risks that would come into there that would sort of lead to the cardiovascular – I could be completely wrong.  I’ll stop wittering there and trying to guess.  I’ll let you take that away, Fraser.  But no, I think that is really interesting.  I know that a lot of people again that I speak to that come to us for help – we tend to find that, you know, there has been some kind of a suicide attempt at some stage.  We tend to find – and obviously I’m not saying that I speak to everybody in the UK who is living with bipolar – we tend to find people who have had suicide attempts, it’s maybe something in their teenage years before they’ve been medicated, before they’ve actually been able to establish what’s obviously happening – what’s going on.

But obviously I suppose, you know, there are probably a lot of people who have later stage diagnoses as well as the condition without necessarily getting that support beforehand as well and I imagine, as you say, it all comes down to the management and different things and obviously lots of things that are out of control like especially the pandemic.  You know, I imagine – well I know personally for a lot of people even who didn’t start out with a mental health condition have found these last two years have put them in a not positive place and so – and I think there’s kind of like a mix because as someone with mental health myself, I kind of feel like I’ve been able to weather it quite well actually because obviously not meaning to be again flippant at all – but my natural tendency to be a bit agoraphobic has quite liked not being – not being able to go out and not going out places.  But then that’s going to have a knock-on effect later on in the fact that when the world does open up again properly, I need to go back out again.

I’m not saying that I haven’t been out.  I’m not saying I’m back to being agoraphobic but there’s so many connotations as to what’s happened the last few years and I think we need to take that onboard.  But Lisa, I think when it comes to like actuaries and underwriters, sort of like the latest evidence that’s available and different things like that, there’s all about – and it’s to do with as well like the ABI which is our Association of British Insurers and certain standards that are set with us as well?

Lisa:            Yeah, so the ABI and the mental health standards that have been published do a great job at emphasising that insurers need to use the latest evidence available and make sure that they’re always looking out for that latest evidence and reflecting it in the underwriting philosophies so that we can be accountable for customer decision-making and making sure that we’re always doing the best by our customers.  So that’s really important and you mentioned a lot of the disruption in terms of the Covid-19 pandemic recently and potential impacts of that on mental health.  So from a data side, what’s important to note is that, you know, these effects – they’re going to take a long time to be borne out and seen in the data so the number of people that would be needed in a research study needs to be large enough for that data to be reliable and it takes time for that data to be collected and also takes time to look at the longer term and to see how that impacts on individuals’ risks over, you know, five, 10, 15 years.

So I think what’s also important though is even sort of without that population data emerging, so that’s yet to come over the next five, 10, 15 years – there are new treatments that are being developed all the time for mental health so it’s really important to stay close to the medical professionals and adjust that data so that we can allow for these new ways of treating mental health in our underwriting philosophies where we can see that there’s potential for them to have a positive impact in terms of improving the outcomes for customers that do have a mental health condition.  So, you know, in some cases for individuals – yeah, so in that sort of case, you know, lifestyle, interventions, protective factors that we’re starting to know can provide, you know, critical tools in terms of an individual and their response to mental health conditions and managing and living with those mental health conditions.  There could be opportunities perhaps to take that into account or – and really to be led by the medical profession make sure we’re always – yeah, doing the best we can for the customers in terms of their latest treatment approaches.

Kathryn:       Brilliant.  I mean, I think – sort of like, I mean obviously that’s fantastic Lisa, to sort of like hear that there is that constant collaboration because I think sometimes again there’s maybe that thing of saying, “Well insurers are over there doing their thing, they don’t know what’s going on,” but to hear that they are speaking with the medical experts and I know that’s probably something that inside the industry we know that there’s medical experts being gained – being accessed all the time and I think that’s not necessarily always translated out into the bigger world but it would be good to hear how things work from like the actuary – so obviously Lisa, you’re there, you’ve been doing all this analysis.  You’ve been working with medical experts, you’ve been putting all this kind of data together to say, “This is what’s been happening,” and it would be good to know then how that kind of then translates to the underwriting development team Fraser, and kind of like you’re building your manuals.  How does it – how do you go from that data to then go, “And this is what we’re offering,”?

Fraser:        Yeah, well hopefully I can articulate this as clearly as Lisa has – that’s a hard act to follow.  I think from our perspective, the reinsurer tends to build the underwriting manuals and as the insurer we’ll use these to assess the applications and the medical information that comes in through the process.  My understanding is that they start by looking at the outcomes of the medical and health studies which Lisa has referred to earlier and this is across the various mental health conditions which we’ll see.  It is important that the studies are of sufficient quality, size, diversification to make it reliable and robust enough for us to be using it.  And I think it’s important that we do acknowledge at this stage that these studies are based on the general population outcomes and not just the insured population.  I think that’s a key point.  We then have to make some adjustments using established data that we do have regarding the insured population versus the general population.

This essentially means that insurers can disregard some of the small increased mortality or morbidity that comes up because this is captured within the base price charged on the policy.  Essentially, in real terms – in terms of the customer, this means with very mild health concerns shouldn’t require an increase to the premium – this being charged to the base price.

Kathryn:       So that’s kind of going back to what we were saying before with Lisa in a sense.  So your mild anxieties, you know, sort of like your milder health conditions are kind of just absorbed within the, “Well this is kind of like what’s happening with the majority of the population so we can’t really charge for it,” kind of thing.  “This is just the base price.”

Fraser:        Yeah, as long as we know what’s been accounted for within the base price and we can disregard that when we come to making underwriting outcomes because all these things are pooled together and I think that’s the important part and I think it’s probably worth just having a brief point at this stage that just pointing out that protection insurance is about the pooling of risk.  Essentially, what this means is that we may have some very healthy customers that pay a little bit more than their risk and some not so healthy customers paying a little bit less than their risk but overall the aim is to provide cover at an affordable premium to all the customers that want to take protection out.  So despite insurers or reinsurers wanting to offer individual outcomes, the guidance for mental health when it comes to underwriting needs to be reflecting on the range of people within the study cohorts.

I think that’s really important to remember.  I think it’s also important to remember that unlike general insurance policies that tend to be on a one or two-year renewal basis, protection plans tend to be long-term, you know, and underwriting outcomes – they are decided at the outset with no planned review period, regardless of whether the condition was to improve or deteriorate and that tends to be not limited to mental health, that’s to all conditions that have been assessed as an underwriter.  Therefore, I think the data we use needs to have identified medium to long-term indicators to ensure that our underwriting outcomes are accurate and fair.  This means that the studies we use have to include a large number of people with the condition otherwise outcomes can be skewed or actually wrong –

Kathryn:       Yeah.

Fraser:        Which would not be good for anybody.

Kathryn:       So I think, you know, in terms of that long-term thing – just to clarify again for anybody who’s listening, like who’s not really familiar with, you know, the insurance side – so if we talk about life insurance or critical illness cover, income protection, anything like that, so things in the protection market not in the general insurance market like you mentioned, so in the protection market, you know, if we’re speaking to somebody in their 20s, they could take out an insurance policy that lasts, you know, anywhere up to, you know, obviously it could be their retirement age, so probably their late 60s.  They could potentially take it out for the whole of their life which means it just keeps going and never ends.

So in a sense the insurers – I always try to say to people this way, you know, “It’s a snapshot, the insurers are taking a snapshot of your life and you, your health and everything else that’s factored in on this day and just that you’re taking, you know, you’re trusting the insurer based upon their terms and conditions and the key features and everything on that day you start the policy and they’re doing the same with you.  So they have to kind of – they factor in your health now but they also have to take in general kind of factors anyway, whether or not that would be a case of, “You’ve got absolutely no health conditions.  It’s predicted you’re not going to have anything, you’re just in a sense naturally going to pass away in your 70s or 80s.  You know, it all needs to be factored in in some stage.”  But, you know, we are talking here about things that, you know, because once the insurer offers this policy as well, they can’t just suddenly take it away.  You know, it’s there, it’s a contract.  If you keep paying your premiums then it’s going to be there for the next 40, 50 years or so.  So it’s kind of – it’s kind of impossible to kind of quantify and predict isn’t it in some ways?

So as you say, it has to just be – obviously it’s very, very complex but I know you’ve got some examples haven’t you about how it works?

Fraser:        Yeah, I think if we take a simple example, you know, if we use the study of 10 people with stress, the data could suggest that all outcomes are standard so no adjustments to the terms are needed.  But if that study is increased to say 100 people, then the next 90 people from those first 10, their outcomes may suggest an equivalent outcome to 150% rating.  This is why I mentioned earlier that the studies have to be of a sufficient size to be used because that gives us a broader range of potential outcomes.

Kathryn:       Yeah.

Fraser:        Now the studies that we do use will be larger than 100.  I mean, they’d have to be a reasonable size but it just gives an example as to, you know, you need a large data because the initial person may just show one thing but as you go further on they can show different outcomes and I think that’s really important to make sure we’re using the right data.

Kathryn:       Absolutely and I just want to clarify as well just for people so in terms of – I know you said it would be known as what’s known as – in the insurance world we’d say maybe a plus 150, you know, 150%.  So as an example for somebody and I’m going to try and make sure I do my maths right here because I really don’t want to get it wrong, especially with you people who are so numbery.  So if it starts off the base premium was something like £5, 150% would mean that we would multiply that premium by 2.5 – there, I almost got it wrong – multiple it by 2.5 because the initial £5 is classed as in a sense 100 so an extra 150 would then make the premium £12.50.  So that’s a good example in terms of like the premiums.  Like I was saying before about how it doesn’t mean it’s going to become ridiculously expensive if you know that it’s going to be pricey, obviously no matter what, £5 is nicer than £12.50 but ultimately if the price is going to increase, don’t always assume it’s going to become unaffordable or that it’s going to – I know some people can feel a little bit sometimes offended by the premium changes.  It’s not necessarily going to potentially get to a level where you think, “Well that’s an offensive level of an increase,” or something.  It’s always worth looking at, but no Fraser, that’s really good to sort of like know that.  But sorry, carry on, I know I’ve interrupted you.

Fraser:        It’s alright.  I think it’s good to get the example out there.  I think in terms of the data, it’s also broken down so, you know, it can be utilised for application questions and the information that we want to obtain from the medical professionals so the information we obtain can then be easily used by underwriters to determine the right underwriting outcomes.  This thing goes further and gets filtered out for the various mental health situations which we’ll have such as bereavement, anxiety, stress, depression, schizophrenia, bipolar disorder and any of a combination of the above to be honest.  And I think what happens then is the underwriting manual will create decisions based on the key information and for the mental health conditions and that includes areas that are really important for underwriting such as when the individual first had symptoms, the type of treatment they may be having as well as any recent changes to treatment.  We also look at things such as the amount of time off work and as well as any self-harm and/or suicidal thoughts or attempts.  So those are some of the key information that underwriters will start to look at.

We also have the added complexity – we see this regular, that customers can suffer from more than one mental health condition and the symptoms and/or the treatment can overlap.  That’s when underwriting manual outcomes do encourage the underwriter to really take a holistic view and not just look to assess each individual condition.  When you overlap it becomes a lot more complex for the underwriter to do but often, you know, the guidance will just ask the underwriter to simply assess this customer using the more severe condition.  We disregard the milder one and we’ll just go down the one that, you know, is possibly a severe condition.  There is overlaps but that will generally be where we will go.

Kathryn:       I imagine that that kind of also comes down to a little bit then of, you know, I think with some things, you know, probably with the underwriting, there is a little bit of a black and white type thing where it’s just like, “Right, you’ve got this, this is the answer,” kind of thing.  But it sounds like here it becomes much more, you know, that’s absolutely when we really need to sort of like the person underwriter not kind of like, you know, we do have underwriting engines that will be able to – some of those black and white situations that they can kind of kick in and make quick decisions but, you know, with this complex of –  It sounds like it really needs somebody, in a sense Fraser like yourself, you know, someone from your team to sort of like sit there and go, “Right, you know what, I need to see the person here and see what’s going on and really understand what is going on with this specific individual.”

Fraser:        Yeah I think you’re absolutely right, Kathryn.  I mean, if you take it to a different condition for example high blood pressure or diabetes, we know what is considered to be a normal blood pressure reading.  We know what is considered to be a normal, you know, HbA1c result for a diabetic and we can then incrementally go up when they rise to create an outcome.  Mental health is slightly different.  It’s – and I think it’s a very – more emotive subject to discuss the underwriting of mental health but what we are looking at is that’s when we do need a human often to look at it and just try and take a real holistic view and look at what would be a positive factor and a less positive factor.  But an underwriter always has the ability to use all the information they have to determine the outcome.  Even if that is more detailed and more granular than the guidance within the manual and that’s when the experience and expertise of the underwriter really comes into play.

You’ve got to balance that medical history and come to a fair decision but I think ultimately the important factor is that we genuinely need to ensure that whatever the final underwriting outcome is, it’s correct, it’s fair and more importantly it’s actually proportionate to the risk and that is really important.

Kathryn:       Absolutely and I think that’s so important and something that obviously as well some listeners may or may not have experienced, you know, I’m somebody who’s experienced – again I’ve not been shown this but the letter that said, you know, “I wasn’t able to get the insurance,” and quite bluntly said that, you know, “It was due to your mental health,” which it does then have – there’s no point hiding away from that.  It’s essentially saying, “We think that at some point, you know, your mental health is going to spiral to such a level that you’re going to want to not be here anymore and take action on that.”  And I think what’s good is that there has been so much work and there is – and I’m not going to say that it’s perfect in any way, shape or form at the moment in the industry but there’s been an incredible amount of work being done at the moment about how these decisions – like you say these – that they’re correct, fair and proportionate – how these decisions are then – that’s conveyed to people and how it’s being discussed just so that people are making sure that when we’re giving this kind of information out to somebody on the decision.

If they don’t have somebody like myself, like an adviser there who’s kind of like the middle person to discuss what’s gone on, we can then obviously – sort of like there can be some kind of a decision there that the insurer can sort of say very clearly as to what exactly is happening rather than it just being quite broad statements which I think can be quite difficult.  Because, you know, obviously if you do get a letter that just says, “You can’t have insurance because of your mental health,” that is very, very broad.  And sort of like for it to maybe be more detailed is really good ‘cos then that adds to kind of that transparency, the fairness to what people are hearing.

If I can just go back to you for a minute, Lisa.  So as an actuary, I know obviously you have so much data that you’re looking at.  I can’t even begin to fathom how much data you look at and put together but I suppose in terms of the mental health, what kind of data would you love to have in front of you?  What kind of data do you need to have to be able to really analyse mental health statistics more?

Lisa:            Yeah, I think that’s a great question, Kathryn.  So more granular data, more recent data on outcomes for a wide range of mental health conditions, you know, mental health conditions cover a really broad spectrum and even, you know, within a specific condition there’s such varying levels of severity so data that can really capture that would be very helpful and also I think Fraser touched on this as well but capturing other risk factors.  So the age at which someone was diagnosed or, you know, duration of any relapses if they have had recent relapses, capturing that within the dataset as well can be really helpful.  I think another area as well is finding ways to quantify some of the biopsychosocial factors that Fraser was touching on, so that support network and the proactive engagement that people do undertake in managing their mental health.  If we could capture that within a dataset then we could start to really have a data-driven approach towards, you know, setting underwriting approaches for this.

Underwriters do a fantastic job at getting really close to all of that so if we can actually collect the data together as well in terms of going forwards and getting more data – more recent data across a range of severities, that would be really helpful.

Kathryn:       Fantastic and I think, you know, obviously I think that kind of sounds like it’s quite standard in a sense, you know, you kind of think, “Well, you need that,” you know, to be able to do this and I think that’s good.  You know, make sure that we sort of like – as an industry that we try and get as much of sort of like outreach to so many areas we can get that data from.  I think Fraser, what are the kind of things that are happening right now in the underwriting world to try and improve access to insurance for people that are living with mental health conditions?

Fraser:        That’s an interesting question, Kathryn.  I mean, I think in the last few years mental health has become a huge focus both within our industry as we all know and in the wider world.  There’s a lot – it seems to be spoken about a lot more, it’s a lot more open and honest.  I think it’s happening and I think it’s a great thing.  I think in terms of our industry, the main piece of work recently for insurers has been working to implement the ABI mental health standards throughout 2021.  This means that realistically customers should have for example two or more choices of how to communicate with an insurer and the insurer should be supporting customers by having processes in place for those that need assistance to complete the application process.  And I think that’s really important and insurers also need to be including an introduction to the questions, explaining the process and making it clear the importance of answering the questions accurately.

One of the other aspects of the ABI mental health standards was ensuring that all questions can be answered without medical knowledge.  Essentially what this means is that the words insurers are using, they must be easily understood by everybody and that’s really key because I don’t know how you can answer a question if you can’t understand it properly and I think using clear, concise and non-technical words when possible really does help that process for the customer.  It is more relatable and I think it just allows customers to feel comfortable answering questions hopefully.  And I also believe that overall this work will have a positive knock-on effect for mental health underwriting with more customers that have mild conditions such as anxiety, stress, depression being accepted on normal terms.

Kathryn:       Yeah.  I think that’s – obviously anything we can do is obviously incredibly positive and, you know, I’m sure it will continue to keep evolving.  Something I’m going to sneak in here just ‘cos it’s something that I always wonder about and while I’ve got you here I’m going to ask you if that’s okay.  So when I’m doing income protection for somebody with a mental health condition, I know that it’s going to have – well most of the time it’s going to have a mental health exclusion.  On the basis that – again, for anybody who’s listening who’s not familiar, with income protection, it is one of those policies where I think it’s fair to say for most things – if you’ve had something before, it’s not going to cover you, or if you’re living with something, it’s not going to cover you for that claimable event because you already have it.  So it would be a case of the insurer can’t you insure it for you to then half an hour later say, “Okay, I’m going to claim on it.”  And that’s kind of like saying it in a very, very sort of like quick and basic way, you know, obviously.

But in terms of like with mental health – so one of the things and even I struggle to get my head around this sometimes is if somebody has got anxiety and depression, you know, we can get them potentially income protection with a mental health exclusion but if somebody has a stronger mental health condition like bipolar disorder, schizophrenia, borderline personality disorder, they can’t get – in most areas in the personal protection space – I’m being very careful with my wording here so if anybody is in that situation, please don’t think you can’t get these things, there’s certain circumstances where we can so please don’t assume no.  But in the personal protection space, with a lot of insurers you can’t get income protection even with a mental health exclusion and I know there must be something behind that Fraser, as to why?  Are you okay to kind of go into that for me please?

Fraser:        Yeah, I think – this is a question that comes up a lot because as you say we, you know, we do see a lot of customers with anxiety, stress, depressive history and the can often get cover with an exclusion, as you know.  I think it comes back to the data again and I think this is crucial when we have some of these outcomes is the research data confirms for conditions such as bipolar or schizophrenia or severe mental illnesses that there is an increased future risk of other conditions if the customer has a severe mental illness.  So, one of the areas we do see is an increased future cardiovascular risk.  Now, we also know that income protection claims arising from mental health or cardiovascular conditions in their own right are sizeable across the industry.  At the time of underwriting, the customer who has a severe mental illness condition may not have risk factors for future cardiovascular events but the data tells us these will present themselves or can present themselves further down the line.

So this goes back to when we were talking about longer term contracts you can’t re-underwrite again at some point.  So as an example, the NHS long-term plan that came out I think it was 2019, estimated people with severe mental illness have a 53% higher risk of having cardiovascular disease at some point.  Now, what we also see is higher than recommended alcohol consumption within this group of mental health conditions.  Now, the alcohol in isolation, Kathryn, might be a standard decision outcome but when you combine that with a severe mental illness it does become a significant concern for the insurer.  If you link it back to the earlier comment on increased cardiovascular risks, there is also a potential for higher than normal alcohol consumption to result in things such as high blood pressure and/or heart rhythm conditions.  So if as an insurer we simply exclude your mental health from that contract, we really wouldn’t be offering an outcome that represents a potential long-term risk.

Kathryn:       Yeah.

Fraser:        So surely it doesn’t represent what the data would say could happen in the medium to longer term.

Kathryn:       Yeah, and I imagine this is one of those times where it’s really hard for people who are in that situation, living with those conditions who in a sense don’t drink alcohol, who are doing, you know, so many positive lifestyle things and it must be very, very frustrating for them because obviously they are going to face this wall of trying to – and as I say, we’re not talking about all insurers here, we’re just talking – at the moment we’re talking about an exclusion here.  Let’s just be very clear.  We’re talking the about income protection side of things, you know.  If you’re going to get life insurance and critical illness cover, you wouldn’t usually get an exclusion for mental health on those but with the income protection side this is where you’d maybe find that it’s more tricky in terms of getting the cover and it’s, you know, it must be really hard because as you say, you’re having to go as a business, you know, you are going by – and insurance is all about risk – and you are going by what the data states and unfortunately that is obviously what the data is leading towards.

But maybe hopefully – whilst anybody listening with those conditions might find that – they might find that frustrating, you know?  It might actually make them feel a bit sad.  You know, and some of them might even feel a bit angry obviously to be lumped in with the general population.  I hope that it’s a clear example as to why these decisions are there at the moment.  Obviously we’re not saying that this is going to be something that’s going to continue being the way it is forever ‘cos obviously things change so often in the insurance world but for the time being, that’s in a sense the best way that insurers work at the moment is using those general population statistics and data and that’s what they are working from.  Thank you Fraser, that was really, really clear for me.  So thank you.

Fraser:        It’s alright and I think you make a valid point though Kathryn, is that, you know, the likes of Lisa and underwriters, we do continue to look at the data that comes out.  You know, it doesn’t stand still, you know, we do look at data that comes in and what’s happening again and then these things are reviewed but at the moment in time this is what the data tells us so then we have to work with that.

Kathryn:       Yeah, absolutely.  So Lisa, I think a good thing to sort of like talk about to round off this session is something that you would both hope to see.  So Lisa and then Fraser maybe, just a short summary of something that you would both hope to see as a change going forward, you know, kind of like what would be your – if you had to choose one, it’s probably hard to choose one but if you had to choose one, what would be your wish in terms of mental health and insurance?

Lisa:            Yeah, I’ve got at first a hope and then a wish.  So in terms of the hope, so Fraser mentioned how data needs to be of a sufficient size so maybe having enough data for actuaries and underwriters to be confident in the findings.  So my hope is for more collaboration across the industry to really pool this mortality and morbidity data together across a wide range of mental health conditions and that sort of data, it’s important to help further refine the underwriting.  As Fraser said, we’re always looking to take into account the latest data and use new rich insights and in particular for more severe but lower frequency mental health conditions that’s where, you know, it’s really important to have that industry collaboration but of course competition is very important as well.  So having a central body such as the CMI or the ABI that can, you know, anonymise that data and take the lead on this sort of approach, that would be a potential really great route forward.

And in terms of my one wish, so this is yeah, probably more of a longer-term one so it is a wish – is I’d love to see the industry working towards finding ways to account for those more protective or positive factors when underwriting individuals, sort of account for it from the data side leading that accounting for it.  So, you know, finding ways to use some of the newer technologies that we’re getting more familiar with in recent years such as tele health services, health apps, potentially even wearables to actually be able to provide a positive credit for those individuals where they do have positive lifestyle behaviours that may mean that they’re, you know, that we can take a different view in terms of their underwriting outcome than the sort of standard population study that’s been used to set the underwriting approach up to this point.  So, yeah I hope that will be able to broaden coverage so further increase access and affordability of insurance for those with not just pre-existing mental health conditions but a wide range of pre-existing health conditions.

Kathryn:       That sounds amazing, Lisa.  I think that would be a lovely thing for us all to wish and work towards obviously.  And Fraser, what would be your wish?

Fraser:        Yeah so I’ve got a couple of things.  I think as we move forward – if we stick with the mental health discussion, I genuinely would like to see mild to moderate mental health conditions have more decisions being given without the need for insurers to access the medical records.  I think that means some improved questioning for customers and I think possibly, you know, even starting to look at utilising some of the lifestyle things which Lisa has referred to and I think we can start to use some of those as we move forward.  But it’s trying to have enough data to make sure that those are accurate.  And I think when we do need to see medical records for mental health conditions, I would like to see the industry do this quicker or find a more efficient way.  You know, at Zurich, we support iGPRs and this does result in quicker return times, you know.  As an example our more recent data suggests that we receive iGPRs back twice as quickly as a traditional GP report and I do think those type of things can help.  We know the longer an application process takes Kathryn, you’ll be able to tell us more than anybody else –

Kathryn:       Yeah.

Fraser:        The longer it takes to get to that end stage of offering terms, the least likely the customer is to still continue to accept those terms because it’s a longer drawn-out process.  So the quicker we can make decisions, the more customers we as an industry can cover and I think that’s really important.  And I think moving away from mental health, I think it would be great to see the industry work together to encourage customers and advisers to explore different sums assured when rated terms are offered.  I mean, I think for example if a customer has a budget of £40 and this gets them, I don’t know, say £350,000 of life cover but once the underwriting process happens and we have an outcome, that means that that level of cover is unaffordable, it would be really encouraging to see the customer retain a smaller sum assured but still within their budget. I think this goes back to the old saying of – when I first started in the industry, you know, “Some cover is better than none.”  And I’d love to see us trying to – the industry work a bit closer together to really have those outcomes for the customer.  I think that’d be great to see.

Kathryn:       Yeah, absolutely.  I think that would be fantastic.  I think, you know, as an adviser in a sense I kind of think, “Well isn’t that being done anyway?”  And it’s – in a sense, you know, because to me that is exactly what I would do.  I always say to – well my approach is to say to people, “We’re going to go for the all-singing, all-dancing version.  Let’s see what the price is and then if not, we’ll work to what the budget is in a sense.”  And I would hope that that would be something that at least advisers are doing but it would be really good to see that through other routes as well, you know, if somebody is going direct – if somebody is using maybe a non-advised route.  You know, it would be really, really positive to see that as kind of like a mentality that we all take onboard because as you say, it is absolutely better to have something than nothing.  There’s so many – that’s probably a bit of a podcast on its own as well in terms of how we could discuss that in terms of obviously bringing in life, critical illness and income protection.

But that’s – thank you so much both of you for going through all of that.  It’s really given me a good understanding of kind of like how these decisions are made, how they’re then translated into what I see as an adviser and also as well just a lot of that base information that kind of goes, “Well, but why?”  As a customer, if I was coming to you guys and saying, “But why have you done this?”  I feel like this has given a real kind of like – obviously I’m sure it’s far more in-depth and there’s lots more that we could discuss about each condition, but it just feels that I’ve got a really – a much better understanding as to why something has happened based upon the way that the industry is working at the moment.  So thank you both so much for joining me.

Fraser:        It’s been great.

Lisa:            Thanks Kathryn.

Fraser:        Thank you very much.

Kathryn:       Lovely, lovely having your insights.  So thank you for listening everybody.  Tomorrow I’m going to be back with Vanessa Sallows from Legal & General and Monica Garcia from Monica Garcia Consulting, talking about mental health and claims in insurance.  If you would like to have a reminder of the next episode, please do drop a message on social media or visit the website practical-protection.co.uk and don’t forget that if you’ve listened to this as part of your work, that you can claim a CPD certificate on the website too thanks to the sponsors, Octomembers.  Thank you so much guys and I’ll speak to you soon.