Written Off ?

Photo Credit : Nil Suliahin

​People with mental health problems are facing sky high insurance premiums, reduced cover or are being refused insurance altogether — sometimes even when their conditions are stable and manageable.   These are the findings  of new research by the ​Money and Mental Health Policy Institute. It shows these factors are leaving people unable to afford insurance, more exposed to financial risk and experiencing unnecessary distress during the cost of living crisis.

The research raises concerns that some firms could even be breaking the law and discriminating against people with mental health problems by failing to base their decisions on accurate data.

"Written Off" authored by Chris Lees, the charity's senior researcher has been compiled after in depth study and calls upon the Financial Conduct Authority  to adopt the recommendations within the report and to urgently investigate whether insurance firms are making fair decisions about customers with mental health problems.

This is all the more urgent given the stresses we are all currently facing with higher mortgages, higher energy bills and employment insecurity.    It maps into the regulatory work that the FCA have been undertaking with their Financial Lives survey of 2020 and their work for their Consumer Duty guidance.   The latter which places a strong emphasis on product providers, such as those providing life assurance and income protection, to provide fair value and products that meet the needs of consumers.

It has long been a frustration of mine that even the mildest of disclosures on the application form, such as taking time off work due to work place stress can be met with a 50 -100% rating, exclusions, additional premiums in the first year or even a blanket decline.  Even when the mental health challenge is short lived and dissipates after employment roles or the employer are changed.   It seems to me lazy underwriting. 

The report looks at the way underwriters respond to more chronic illnesses and have drawn upon the lived experience of their research community. 
 
​At Big Picture Financial Planning we will always challenge underwriting decisions. I have reached out to the Money and Mental Health Policy Institute to become part of the research community to report times when mental health disclosures have impacted on the premiums or terms for life assurance, critical illness or income protection.  

The report, methodology and recommendations can be found on their blog here.  Their website also make a great resource for anyone who is or who knows people suffering psychologically because of debt and other money problems. 

Source:
Lees C. Written off? Making insurance work better for people with mental health problems. Money and Mental Health Policy Institute. February 2023 is also available in our resource section. 

Author : Jill Turner