Insurance Cover Declined For Mental Health Reasons

Media Release July 2011

Insurance Companies Declining Cover For Mental Health Reasons

The average New Zealander is now more likely than ever to have their claim or application rejected by an insurance company for mental health reasons, says leading insurance support services body Ginger Group.

A national authority for the Ginger Group on insurance claims and applications, Brian Klee, advises New Zealanders to seek medical advice when lodging insurance applications and claims, or face a high risk of being declined.

“Compared to three years ago, insurance companies are now far more likely to apply a mental health exclusion to the average person, or to use it as grounds to decline a claim.

“The insurance industry appears a bit stymied, or dare I say it even panicked, in the area of mental health. The industry has been caught out by changing lifestyles and the world events – factors like excess use of alcohol, drugs, the global credit crisis and the Christchurch earthquakes – and as a result the international reinsurers are turning the screws.”

Mr Klee says the life of the average Kiwi is far more stressful now than ever before, while incidences of P addiction and posttraumatic stress disorder (PTSD) are on the rise.

“I expect it won’t be long before we see a dramatic increase in mental health-related claims coming out of Christchurch. P is another issue – I am currently fighting a case in which a man was traumatised after being attacked by a P addict.

“In another example, I had a client rejected for non-disclosure because her doctor had prescribed her St John’s Wort for stress. There were other reasons, but that was one used against the claim being accepted.”

Mr Klee joined the Ginger Group last year, and recently returned from a trip to the United States that has left him even more convinced of the need for clinical involvement in the application and claims process.

“It is important that people who may have had health issues, like heart trouble, be able to get a fair shake with an insurance company if they have made significant lifestyle changes. It shouldn’t just be a black mark against them.

“The same can be said for somebody who has been declined by an insurance company after being struck by a disability and trauma. Very often they are too sick to fight, or lack the detailed knowledge and negotiating skills to get the insurance company to shift its position.”

Mr Klee says research out of the UK also shows that the average person is more likely to share personal details with a clinical nurse than with their broker.

“This means the average person is less likely to be rejected at a later date for non-disclosure, and the insurers like it because the reinsurer gives them a discounted rate as a result of this quality process.

“The Human Rights Act has also been very helpful in advancing the cause of people who for some reason or another have been rejected by an insurance company. For example, somebody with AIDS can be declined, whereas a person who is HIV-positive now has a fair change of getting some life insurance.

“They cannot discriminate on the basis of who you are.”

Ginger Group CEO David Whyte says that as a result of Mr Klee’s visit to similar companies in the United States, the Ginger Group, with Special Risk Insurance, will investigate establishing a team of clinical nurses to support insurance brokers and clients who are struggling with insurance companies over complex health, occupation and lifestyle claims and applications.

“This is the trend internationally, but a first in New Zealand, and we’re fortunate to be doing it with Brian who is the only authority in New Zealand on extremely complex claims and applications – his 20 years of underwriting experience will stand us in good stead.”

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