Super funds urged to target mental illness-related TPD claims
Published 06 Nov 2014
Total and permanent disability (TPD) claims relating to mental health issues are set to be a new target for super funds and their insurers, according to new research.
Figures from SuperFriend, a non-profit health foundation established by industry super funds, showed TPD claims for mental illnesses cost nearly $148 million over a five-year period.
This represented an average payout of $82,960 per claim across the 13 ‘all profit to member’ super funds and the six insurance groups that covered them.
SuperFriend and IFS Insurance Solutions compiled data from between 2007 and 2011, including information on 4.1 million super fund members.
The research was completed as part of the Super Mental Illness National Data (SuperMIND) project, which assessed claims regarding mental health problems in relation to both TPD and income protection (IP).
Boosting industry understanding
According to SuperFriend, suicide rates by gender, location and age were also analysed in an effort to better understand mental illnesses and provide more support to fund members.
The organisation’s CEO, Margo Lydon, said psychological wellbeing is a risk management issue for a range of businesses and government organisations, as well as the wider community.
“Mental illness-related claims are one of the few insurance claim types that a fund and their insurer can influence, lessen and ideally prevent if detected early,” she said.
Ms Lydon added that SuperMIND reports help create a benchmark that insurers and super funds can track their performance against. This will help them to develop an understanding of problems and identify when they are occurring.
“Funds and their insurers can then actively develop early intervention strategies to help reduce the financial and social impact of mental illness and ultimately better support their members’ wellbeing,” she said.
A closer look at the data
The report highlighted that 10 per cent of all superannuation insurance claims are linked to mental health problems and suicide. This trend is particularly noticeable in certain demographics.
For example, 25 per cent of TPD claims in women aged between 25 and 34 are due to mental illnesses. However, the rates were even higher for men, which was typical in TPD claims across all ages and most locations.
Some states also had higher claim rates, with Queensland and Victoria experiencing the largest number of reported TPD incidents.
Shane Fielding, principal of group risk at IFS Insurance Solutions, said the analysis is the first of its kind to benchmark data in order to identify preventable trends.
“While insurers do need to think about how they price their offer, product design and the claim process is equally as important when it comes to claims related to mental illness,” he explained.