RGA Global Mental Health Survey Part III: Underwriting

John Cardus
Leigh Allen
Erin Crump
Dr. Peter Farvolden

A man smiles while explaining a document to a colleague

In Brief

This is the third article of a four-part series that will also include an overview and articles further exploring the survey’s implications for product development and claims. For more information, view the survey infographic and full survey report.

RGA’s global mental health survey discovered that demand is increasing for mental health products and services. Nevertheless, less than one third of respondents have launched new products and services to meet that demand in the last two years. More than 80% of survey-takers said underwriting was a contributing factor to their cautious approach to mental health products.

The issue is more complex, however, than underwriting guidelines and practices alone. Insurance products are developed through a combination of product, pricing, and risk, and are affected by a host of other factors, such as customer needs, operational objectives, healthcare infrastructure, and regulatory environments.

Historically, insurers declined or applied broad exclusions to many cases with mental health disclosure, often because of a lack of data or limited disclosures and supporting medical evidence.

As the insurance industry undergoes a major shift around mental health coverage, underwriters play a key role in the development and implementation of new philosophies and practices to align the risk assessment of mental health issues with wider business needs and direction.

This article will detail the underwriting findings of RGA’s survey, the specific challenges of assessing risk related to mental health issues, and some possible paths forward offered by insurers in more mature markets.

Underwriting updates are underway

RGA’s survey found that the life and health industry is making progress in adapting underwriting approaches to widen the scope of acceptable risks for applicants with mental health conditions.

49% of respondents said they have updated underwriting philosophies/practices in response to mental health risk in the last two years.
48% intend to update their underwriting philosophies/practices around mental health risk in the next two years.

This renewed commitment to modifying underwriting practices represents a significant shift in the risk management of mental health issues and a recognition of the important role underwriting can play in increasing access to mental health products and services.

RGA's 2023 Global Mental Health Survey provides insights into insurers' current offerings and initiatives related to mental health and a unique view of where the industry may be headed.

View the full report

As the industry shifts to incorporate mental health considerations in product design, underwriters face key challenges:

Obtaining valuable customer disclosures: If a person has suffered a heart attack in the past, it is relatively simple for them to disclose that event when applying for an insurance product. But many people struggle to accurately describe their mental health. Should they detail minor mental health episodes, or only those that resulted in a confirmed diagnosis or hospitalization? How should they disclose depressive periods, or the effect of stress or anxiety?

Cultural attitudes toward mental health muddy the picture even further. Different regions have different levels of comfort disclosing and discussing these conditions, as demonstrated by RGA’s survey. The largest group of respondents who reported mental health was a low priority or not a priority were from the APAC region (26%), followed by respondents from the Americas (15%) and EMEA (11%).

Product focus may also affect how much or how little a region prioritizes mental health. For example, RGA’s experience with APAC insurers indicates a focus on simplified underwriting practices and processes, which are not aligned with the relatively costly and time-consuming information-gathering needed to assess risk for individuals with mental health conditions.

Supporting medical evidence: It can be challenging for underwriters to find appropriate medical evidence of mental health conditions. Records from treating psychologists or psychiatrists may be less standardized than those of physicians and medical testing facilities. Additionally, while psychologists and psychiatrists can provide accurate diagnosis at a given time, a diagnosis can change as the patient’s condition progresses or he or she reacts to treatment.

The use of different diagnostic classification systems around the world creates further variations. The International Classification of Diseases (ICD) and the Diagnostic and Statistical Manual of Mental Disorders (DSM) have numerous similarities, and it is possible to convert the diagnoses of one system into another. But at their core, the two manuals have different approaches to individual diagnoses in terms of both definition and name. Each diagnostic manual can also vary significantly between editions (e.g., DSM-IV vs. DSM-V-TR). For example, a person diagnosed under a previous version could now align with a different diagnosis, to which different data may apply.

Additionally, much of the academic and clinical research of mental health has not been analyzed from an insurance perspective.

Finally, underwriters and their claims colleagues should consider further collaboration to build understanding of mortality and morbidity outcomes for people with mental illness. For example, a death certificate may list suicide as a cause of death, but it is unlikely to include details on the potential impact of stress, anxiety, or depression, even as a contributing factor. For that reason, the mortality risk related to depression or psychological conditions is difficult to determine.

Meet Dr. Peter Farvolden, RGA’s new mental health consultant and a longtime researcher and clinic head at Toronto's largest mental health teaching hospital.

Read the interview

Underwriting considerations

The risk assessment of mental health conditions requires a focus on the “whole person” that recognizes the unique complexities presented by an individual’s history. How can underwriting capture these complexities and meet the changing needs of customers in accessing mental health coverage?

Customer disclosures: Behavioral scientists and specialists can play a critical role in crafting application questions and assessments to destigmatize mental health and invite responses that provide the appropriate information needed to assess risk.
Individual assessments: Individual underwriting of applicants with mental health conditions enables the underwriter to incorporate a diverse range of complex risk considerations and represents an effective and equitable approach. The time and cost associated with these assessments may increase the tension between effective underwriting and an expedited sales process, but individualized assessments remain the best way to gather information and gain a holistic picture of risk.
Data utilization: The ongoing development of effective mental health underwriting guidelines should continue to identify and incorporate new data sources and insights.
Medical staff: RGA’s survey found that only half of respondents currently use mental health specialists, including psychologists, psychiatrists, and mental health nurses, to support underwriting, claims, and product initiatives. Medical staff can help underwriters stay current on developing treatments and provide insights into diagnosis, treatment, and management of mental health conditions. Underwriters can also collaborate with medical colleagues to analyze customer disclosures and medical evidence to gain a clearer picture of risk.
Training on the biopsychosocial model: The biopsychosocial model incorporates the multiple biological, psychological, and social factors that influence an individual’s mental health. Individual outcomes in mental health may be influenced by rapid social change, stressful work, discrimination, social exclusion, poor physical health, and human rights violations, along with genetic risk factors. Underwriters can work to create assessment approaches that consider biopsychosocial factors as well as the impact of socio-cultural environments.

Conclusion

Expansion of mental health cover will require significant changes to underwriting policies and approaches, but RGA’s survey found that many insurers are willing to forge new pathways to more inclusive mental health offerings. Underwriters will play a critical role in the development of new products, practices and processes that take into consideration the complex presentation of mental health conditions.