Life insurers in Australia are paying out on mental health claims at around the same rate as they occur.

According to the Financial Services Council (FSC), mental health claims in Australia are the third most common across all life insurance categories.

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In addition, the Australian Bureau of statistics lists mental health conditions as the second highest cause of disability with 22%. Also, 20% of all disability claims are made due to mental health conditions.

This was found in an analysis created by the FSC with consultancy KPMG.

FSC CEO Sally Loane said: “In this initial analysis it shows that overall, Australian insurers are paying out mental health claims at the same rate as they are occurring in our community – in other words, they are not lagging.”

KPMG and the FSC looked at more than 102,000 claims reported during 2017-18. Furthermore, 92% of these claims were paid in the first instance, amounting to over $10bn.

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Loane added: “In future, we hope to be able to break information down by gender, age and geographical location. We will also be able to provide more sophisticated insights into the data to give the life insurance industry the knowledge to design the products of the future.”

Australia

Mental health is not the only part of insurance that is hoping to better its offering.

The Australian Prudential Regulation Authority (APRA) is set to intensify its scrutiny on the practices used by reinsurers and insurance firms to manage the financial risks of climate change to their businesses.

The financial watchdog has also asked banks and superannuation trustees to move from gaining awareness of the financial risks to taking action to mitigate them.

It comes in the backdrop of a survey’s outcome, which revealed that a substantial majority of regulated organisations are taking steps to increase their understanding of climate risks.

The survey was conducted with the participation from all 38 of the large banks, insurers and superannuation trustees.