At the Protection Review conference today (July 11), Christine Husbands, managing director of RedArc Nurses, a provider of qualified nurses, suggested the industry needed to work on "understanding the answers" rather than "asking the questions".
Ms Husbands was referring to the underwriting process providers go through to manage their risk effectively, which impacts the price of a consumer’s premiums.
She said those without medical training were often misjudging the ‘risk’ posed by a consumer and misunderstood how mental health episodes could affect a consumer’s mental state.
She said anyone could encounter such an episode and often those who live with it can manage it better.
She said: "Underwriting is not about asking the questions, it’s about assessing the risk.
"Sometimes we have it back to front. Many people have these issues or episodes and then tend to be the people who understand it and manage it more.
"If there’s somebody who exposes nothing then actually, would they know how to cope if something did happen?"
Ms Husbands told FTAdviser with the number of diagnosed mental health conditions on the increase, many consumers applying for insurance will now disclose at least one instance of mental ill health.
She said: "Before applying restrictions, exclusions or declining, insurers need to find ways to accurately assess the risk posed by mental health conditions.
"This starts with the questions, which need to be clear and unambiguous. But, more importantly, insurers need to ensure that they understand the answers to these questions properly."
Earlier in the day the conference heard that the protection sector was failing clients with mental health issues who often faced high prices caused by underwriting practices, and exclusions.
Ms Husbands said that clinically qualified staff such as nurses could assess how well an individual was managing their mental wellbeing and whether they understood their triggers, as well as keep in touch and manage risk over time.
She said: "Once accepted, risk can be managed through occasional touch-base calls from a clinically qualified person to check all is ok and with technology, potentially include the requirement to complete a mood diary.
"Crucially, these arrangements will give a ‘panic button’ to the individual so that help can be sought quickly from a known trusted source, enabling issues to be nipped in the bud, benefitting the individual, the insurer and employer."
Also speaking at the conference, Dr Ali Hasan from VitalityHealth said value-added services — such as counselling and GP appointments — could help with this by helping to assess the risk different consumers held.
For instance, if a consumer was using their wellbeing app and receiving counselling, their mental health could be less of a risk to the insurer than a customer who was not.
But Andrew Wibberley, director at Alea Risk, said the industry had to be careful about using this 'Vitality-style' tracking of consumers when it came to mental health.
He said: "The last thing you want is for someone to go through a bad phase and end up with an increased premium, but I suppose there could be a way around that.
"But realistically, if you’re adding value-added services to your current consumer policies and it’s not affecting the way you underwrite, then I would question how much value those services are actually adding."
Alan Lakey, director of Highclere Financial, agreed and said moving to a world where clinically trained people managed risk would be "sensible".
Peter Chadborn, director at Plan Money who was also at the conference, said: "I don’t think the adviser should be asking the questions.
"Our skill set is getting to know our client, being empathic and using objective settings and research to give recommendations — it should stop there.
"For example, I know very little about mental health and if someone started explaining their situation, I would not know what questions to ask or even understand the answer."
Mr Chadborn added that it would be nice to see a world where consumer interaction with value added services could help lower premiums but said it came with difficulties.
He said: "For instance, it’s not a renewable policy where prices vary year-on-year, it’s a ‘you take this for so many years for this amount of cover’ product. But it would be a good move and good step for the industry."
imogen.tew@ft.com
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