Conor D’Arcy, Head of Research and Policy, Money and Mental Health Policy Institute

The challenges people with mental health problems face with different insurance products

3 March 2023

We recently launched our report, Written off?, exploring insurance and the difficulties that people with mental health problems can encounter when choosing, buying and using these vital products. 

Some of our findings were based on mystery shopping of travel insurers. Through that, we saw how people with conditions like depression and bipolar disorder could face significant price increases or be offered policies that excluded claims related to mental health without a drop in price. In some cases, people with those conditions could be declined altogether. We found that these price increases, exclusions or declines sometimes took very little account of how well-managed people’s conditions are.

Since the publication, we’ve had useful discussions with people working in the insurance industry about the extent to which these concerns about travel insurance apply to other forms of insurance, like life and income protection. 

In this blog, I’ll explain what we found across the market using a range of research tools and why we made recommendations that apply to a range of different forms of insurance. I’ll also discuss how negative experiences with one product or firm can shake consumers’ trust in the insurance industry as a whole.

The impact of high premiums, exclusions and declines

In Written off?, we used a variety of data sources. The mystery shopping exercise was one element but we wanted to make sure the voices of experts by experience were at the heart of the research.

We conducted two surveys and a focus group with members of our Research Community, a group of nearly 5,000 people with experience of mental health problems. We received almost 300 responses, with questions and answers relating to several insurance products. 

The findings from our mystery shopping align with what we heard from the Research Community about other kinds of insurance where mental health is asked about.

“When we moved house and took out a bigger mortgage, we could not increase the mortgage life cover due to my history of mental illness. We are therefore only covered for a percentage of the mortgage cost if we pass away during the mortgage term.” Expert by experience

“I tried to get insurance which would cover me if I couldn’t work – being self employed this was important to me. I asked them to exclude my mental health history as I could not get cover. Basically I was told that until I stopped meds I couldn’t get cover!! I gave up in the end. I mean would you ask a diabetic to stop insulin??? Same in my view to keep me well!” Expert by experience

A lack of clarity about data and decisions

We also heard from Research Community members who felt confused and discriminated against by firms’ decision-making across the insurance sector.

“I had to declare [my mental health problem] as part of getting income protection and life insurance, in a medical interview. It was really nerve wracking and I was turned down by a number of providers due to it, even though it is well managed and has been for a number of years and does not stop me from working.” Expert by experience

“[It] seemed bizarre to me that one company lumps together suicidal thoughts as the same as suicide attempts, whereas another one doesn’t even ask about thoughts and only interested in attempts.” Expert by experience

That sense of unfairness was heightened by the lack of clarity regarding the data that’s used by insurers across the sector, how it shapes the offer made to customers and how that’s explained. While practices differ across firms and products, there is little transparency about what data is used. 

The firms we spoke to didn’t give us specifics on what data they drew upon, but often referred to medical literature and claims data. This lack of transparency makes it impossible for individual consumers, research organisations or even regulators to know whether people with protected characteristics like mental health problems are getting fair value and fair access to products. 

Our main recommendation in the report was for the Financial Conduct Authority (the regulator for the insurance sector) to take a closer look at the data firms are using in relation to mental health conditions, to ensure they’re relevant, reliable and up to date. This could help to give customers more confidence and clarity – in all insurance markets.

Broader accessibility issues

Beyond pricing and data, there were other problems that cropped up across insurance products. We heard from people who weren’t clear on what they were covered for, who struggled to make claims or received little support when struggling with their mental health. The way insurers structure journeys, provide information and handle claims contributed to this.

“I can’t read terms and conditions as they’re too long and complex so I have to trust the companies.” Expert by experience

“I read the main points that I was covered for but when I put in a claim they said it was not covered (in the additional tiny writing). I struggle to focus when reading and don’t always take it in.” Expert by experience

“I was going through a poor period of mental health. I set my out of office on my personal email to say it would take me a while to reply to emails. They replied saying my insurance was cancelled (the direct debit bounced). I now don’t have contents insurance… I would try explaining to them about my mental health but I don’t think they care.” Expert by experience

“The forms appear deliberately complicated to put you off claiming.” Expert by experience

A number of these issues are not unique to people with mental health problems. Lengthy terms and conditions can be hard for many of us to follow. But, when stacked on top of the other bad experiences people with mental health problems shared with us, it contributes to the lack of trust and the feeling of being treated unfairly that many respondents told us about. 

One attendee from the industry at our launch event echoed this: while people immersed in specific products might see all the differences between travel, life, home contents and other products, for the typical consumer these will often come under the same umbrella. Bad experiences in one part of the sector can lead to distrust, confusion and a reluctance to disclose across the board. 

While individual firms can only do their best – and we did highlight examples of good practice in the report and at the event, including the Association of British Insurers’ standards on mental health – there’s a need for a broader conversation right across the insurance industry about how to get this right.