COVID-19 Forces Insurers to Rethink Approaches to Mental Health

There's no denying that life has changed since the arrival of COVID-19. Virus transmission and illness still remain a concern, and the pandemic has forced people who've lost loved ones and close friends to face their own mortality.

Layoffs and furloughs have hit people hard and daily routines have been upended with adjustments to working from home and online school.

Now more than ever, it only takes one child care crisis or missed appointment to trigger our anxiety. According to a Swiss Re study, 45% of Americans are more concerned about their mental health than they were before the pandemic, and over half believe this concern will linger after the crisis has passed. While younger people are more likely to say they've always been concerned about their mental health — irrespective of external events, and older age groups are more likely to say mental health is not a concern, the increase is consistent across all age groups.

Mental well being is a key driver of our overall health, as are physical activity, sleep, nutrition, substance abuse, and our environment. We call them The Big Six Lifestyle Factors, and they're all interconnected. For example, the amount and quality of sleep you get can affect your physical activity and food choices. What's more, nutrition is often correlated with mental wellbeing in that some people eat more when they're depressed and eating more compounds their depression — becoming a vicious cycle.

Mental health, in particular, warrants more serious attention in our increasingly uncertain world. And, for their part, insurers need to acquire a better understanding of mental health and undertake innovation and investment.

The Underwriting Imperative

At Swiss Re, we're striving to be at the forefront of understanding these risks.

It starts with better informed underwriting. Until now, life insurers have relied on data such as age, build, and blood pressure to evaluate applicants, but mental wellbeing and other lifestyle factors (e.g. nutrition, activity, sleep) open up a world of alternative data to support underwriting. Besides physical characteristics, what if we could know more about an applicant's lifestyle? Of course, mental health can be a mix of comorbidity risks, which can make assessing mental health conditions seem more formidable.

But it's not impossible. As more alternative data sources emerge, the task of assessing risk becomes less daunting. In addition, improved application questions will help determine comorbidity risk factors, ensuring increased granular risk assessment, a more transparent claims process, which, potentially, could form the basis for more targeted and fewer exclusions.

Overcoming Paralysis

Understanding human behavior can also reap rewards. Sometimes all it takes is a few small steps to make a big difference. Besides the impact of mental health on one's ability to function, the stigma of it can also be paralyzing.

For example, consumers have been reluctant to share personal information about their condition with insurance companies out of shame or fear of being rejected. In acknowledgement of this, insurers are refining how they collect responses from applicants. In this situation, completing an online form may be preferable to speaking with an agent or communicating with a chatbot.

Insurers are also framing sensitive questions differently by stating upfront that a symptom or behavior is common. Both can go a long way to ease the anxiety associated with getting insurance.

Insurers as a Wellness Partner

Life and health insurers have an inconsistent record of underwriting people with mental health issues. Accordingly, we are designing products to accommodate those customers and improve their experience. That coverage may come at a higher price, which can be a challenge given the financial strain many already face, exacerbated further by the current recession.

This underscores the need for insurers to provide customers with the materials and resources they need to better manage their condition. Historically, as an industry, we've focused primarily on bringing support to individuals at the claims/pre-claims stage. However, now, there is also a focus on seeing where and how we can offer support to policyholders when they're well and first go on risk – which is where there is potential in the digital support space. There are currently 1,435 mental health apps in existence, proof that early and tailored intervention is no longer just a trend – it's a movement.

We all want an outcome where coverage and conditions are aligned, and customers feel that their insurer understands and supports them in their journey to wellness. Our industry must act with determination to help shift the focus to more positive interactions with consumers, and, where possible, champion early intervention before symptoms become chronic. This approach will not only benefit consumers by minimizing risks associated with mental health, but it also benefits insurers with more policyholders who enjoy improved health, wellbeing, and a less costly claims experience.

The Protection Gap Benchmark

We often refer to the protection gap, which is the difference between how much life insurance people have and how much they actually need in order to leave their family with a solid financial foundation when they die.

The U.S. protection gap stands at $25 trillion, and the outlook for this year is potentially worse. Mortality resilience will likely deteriorate further as deaths rise from COVID-19, while household assets suffer in the recession.

The protection gap is a critical benchmark, and Swiss Re is passionate about closing it. Investing in extensive research in the field of mental health will better enable us to help insurers make more accurate and fair risk assessments. This, in turn, could help our industry extend coverage to people who may otherwise not be able to get insurance.

The pandemic took us out of our comfort zone, and however unsettling that may feel, I believe that many positive outcomes will emerge from this unprecedented period. At the top of our list is a renewed commitment to a greater understanding of mental health and investing in products and services to meet the needs of a population in crisis.

— Read Jill McGruder to Lead LIMRA and LOMA's Parent in 2020, on ThinkAdvisor.

Neil Sprackling is president of Swiss Re's Life & Health U.S. business and a member of the firm's Americas management team. He's a member of the board of directors of the American Council of Life Insurers, and a member of the ACLI's CEO committees on prudential regulation and taxation. He's also a member of the board of LIMRA/LOMA.