Phil Jeynes, head of sales and marketing at UnderwriteMe, says insurers still ask a very simplistic question about an individual’s mental health.
He explains: “Insurers ask applicants whether they have ever had a mental health issue, stress, depression or anxiety. Ten years ago this would have been interpreted as something that required a trip to their GP, but now we recognise that most of us have a mental health issue from time to time. We need to change this question: it is too blunt.”
Instead, Mr Jeynes would like to see insurers offering more explanation around this question. This could include information about the types of mental health conditions that might affect the risk, as well as additional questions for individuals who answer ‘yes’, such as the nature of the incident and the medication that was prescribed.
Taking this approach will give a better understanding of the risk, but it will also help to prevent non-disclosure. “Where an insurer takes a blunt approach, there is a danger that an individual will keep quiet about something that might be important such as seeing their GP for stress,” says Mr Jeynes.
“We need to be much more open with our customers about the information we need and how we will use it.”
Mr Knowles agrees. He would like to see greater use of more empathetic questioning on online applications. “There is such a drive to get straight through business but if insurers included information explaining how an applicant’s responses had affected the price it would make the process much more transparent,” he says.
Price transparency
The Money Box example also throws up another issue that affects individuals with any kind of health condition. By starting the process with a premium for a clean life, consumers can feel cheated if the final price is loaded as a result of any disclosures.
This approach can be particularly misleading if it is used to determine the cheapest provider; for instance, on a price comparison site. Once underwriting is factored in, the so-called best price can often fall down the table as a result of the loadings that are applied.
Paul Roberts, head of protection at Old Mutual Wealth, says: “It is wrong to provide an illustration that an individual will not get. Advisers should get a decision in principle on anything that might affect the premium.”
As people do not disclose everything automatically, he also recommends that advisers conduct a thorough fact find to ensure they understand all the relevant factors. As well as illnesses and health conditions, these could include less obvious things such as the individual’s career or even a hobby.
“The industry needs to put the customer’s interests first,” Mr Roberts adds. “The FCA is looking at how to ensure vulnerable customers have access to insurance. These could include individuals with a history of mental [health] issues, but equally a famous footballer or someone with a family history of heart conditions.”
