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Insurance cover for people who have mental health problems
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Introduction
The Disability Discrimination Act
Successful claims against insurers under the Disability Discrimination Act
Association of British Insurers (ABI) Code of Practice guides
Different types of insurance
Private health insurance
Travel insurance
Life insurance
Motor insurance
Complaints
When to make a complaint
Legal redress
Recent initiatives
MDF Travel Insurance Scheme
Rethink
Loonscape
Introduction
This factsheet is intended for people wanting information about insurance and the possible effect that any previous or existing mental health problems could have on their obtaining cover. It gives background information on discriminatory practices affecting people with mental health problems and ways of making a complaint or seeking redress, particularly under the Disability Discrimination Act 1995. It also gives contact details of organisations and insurers who may be able to help.
Background
Mind receives numerous calls and letters from people who have, or have had, mental health problems and cannot get insurance cover. Many people find that when they inform some insurance companies about previous or existing mental health problems, they are either refused cover or asked to pay an increased premium.
In the past, before information advances, insurance companies found it difficult to obtain medical records or reliably assess risk from mortality rates. As a result, insurance companies worked together to create their own mortality tables based on the national average. Under this system, most people could access insurance.
Discrimination against people with mental health problems (and other groups seen as ‘high risk’) began to occur as certain large insurance companies moved away from this system. Advances in information exchange meant that these companies could access individual medical records and exclude anyone seen as presenting an unacceptable risk. This is called ‘cherry picking’ and the main motivation behind it is increased profits for insurers. Some insurers ask a single blanket question about whether a person experiences (or has experienced) mental health problems and decide that anyone answering ‘yes’ to this question poses too high a risk to insure.
The problem with cherry pickers is that they put pressure on the traditional companies (many of whom really believed in insurance for everyone under the old system), leaving them to pick up all of the ‘high risks’. The result is that many of these smaller firms have been forced to adopt the same practices as the larger companies, which means that many people with any form of mental health history are unable to access insurance at all or are forced to pay premiums that are unacceptably high. This creates two categories of people: those who are ‘insurable’ and those seen as ‘uninsurable’.
People with mental health problems have generally fallen into the latter group. Read and Baker (1996) found that 25 per cent of mental health service users had been turned down by a finance or insurance company. However, over the last 10 years this situation has improved substantially, due to changes to the legislative framework (especially the Disability Discrimination Act) and the effects of this on industry guidelines.
The Disability Discrimination Act 1995
The Disability Discrimination Act 1995 makes it illegal to provide goods, facilities and services to a disabled person (including people with mental health problems) on terms which are unjustifiably different from those given to other people.
Since 1996, the Disability Discrimination Act has made it illegal to refuse insurance, or charge higher premiums, unless the company can demonstrate statistically higher risks as a direct result of a specific mental health condition.
When deciding about whether to insure someone, a risk assessment should always be carried out by the insurer. It should include a statistical analysis that a person presents ‘a higher than average risk’, since an individual could sue an insurance company under the Disability Discrimination Act if they were unfairly declined insurance. However, people are reluctant to take out cases against big institutions and only a small handful of cases taken out under the Disability Discrimination Act have been successful.
Insurers may still ask the single question about whether or not the person applying for insurance has ever experienced a mental health problem and either refuse insurance or increase premiums on the basis of a person saying that they have. If you are applying for insurance and this happens to you (or you believe that your insurer has treated you unjustly), you could have a case under the Disability Discrimination Act 1995 and you may wish to seek legal advice (see Useful contacts at the end of this factsheet).
There are, however, many instances where insurers can still justify discrimination despite the existence of disability legislation (for more information please see the separate sections in this factsheet on private health insurance, travel insurance and life insurance).
Successful claims against insurers under the Disability Discrimination Act
Despite some of the failures of the Disability Discrimination Act to protect people from discrimination, there have been some successes. The experience of psychologist Rachel Perkins, who has been diagnosed with manic depression (or bipolar disorder), is one of the examples to be handed over to the Social Exclusion Unit.
After a pay rise in 1998, she applied to increase her payments to her health insurers. But when she declared her spells in psychiatric hospital, her insurance firm refused.
Rachel, a member of the Disability Rights Commission's Mental Health Action Group, then wrote to her insurance firm detailing how she intended to pursue a case of discrimination under the Disability Discrimination Act.
After a two-year battle, the insurance firm granted Rachel her increased cover. "I am delighted Abbey Life changed their mind," says Rachel. "But at the time I was very angry.”
“Under the Disability Discrimination Act, insurers are required to treat disabled people no differently than anyone else. The act requires them to make reasonable adjustments. This just does not happen."
Mind and a number of other leading mental health organisations have called for the law to be strengthened to outlaw this kind of discrimination.
Association of British Insurers (ABI) Code of Practice guides
The Association of British Insurers (ABI) sets out the general principles and exceptions relating to insurance from the Disability Discrimination Act (see the end of this factsheet for contact details). In general, an insurance company must be fair and reasonable in its dealings with disabled people (including people with mental health problems) and must account for any difference in treatment between disabled and non-disabled people. Insurers' decisions must be based on information relevant to the assessment of the risk to be insured and from a reliable source. These may include:
- actuarial or statistical data
- medical research information
- a medical report, or
- opinion on an individual from a reliable source.
Insurers must make sure that the information is accurate and that their use of it is reasonable. It must be shown that the disabled person has a higher risk; if not, there should be no differentiation in their treatment. Again, if you believe that your insurer has acted unfairly, you may wish to seek legal advice (see Complaints and Legal redress sections of this factsheet).
Different types of insurance
This section covers different types of insurance. It sets out instances where insurers still justify discrimination despite the existence of the Disability Discrimination Act. It is not a statement of the law and so if you are unsure about whether or not you have been treated unjustly by your insurer, you should consider seeking legal advice or taking up a complaint with the Financial Services Ombudsman (see Complaints and Useful contacts sections of this factsheet).
Private health insurance
Despite the existence of the Disability Discrimination Act, special exemptions can still apply to private health insurance. Insurers can refuse cover for conditions and illnesses that exist at the time the insurance contract is taken out (called pre-existing conditions). They may also include an ‘exclusion clause’ which means that they will not provide cover for the first years of a policy if the person has experienced a serious condition before the start of the policy. Refusal to provide cover must be based on objective evidence that the person’s recent medical history increases the risk of them making a claim.
Proof of an additional risk may be based on claims information, government statistics, medical research or industry sources. Health insurers may also request a medical report on an individual. There must be reasonable grounds for a decision to refuse cover, for instance, evidence that the person’s pre-existing medical condition is likely to increase risk. However, the decision must be based on the person’s health condition and not just because the person is disabled.
Private health insurers tend to exclude people with a pre-existing condition. If existing members develop a mental condition, such as schizophrenia or bipolar disorder (manic depression), hospital treatment is generally limited to a specific timescale and outpatient treatment is limited to a maximum ceiling. Specific terms may be related to the severity, stabilisation and likelihood of recurrence, but there is a measure of discretion in individual circumstances.
Travel insurance
A travel insurer cannot refuse a travel policy to a disabled person, which includes a person with mental health problems. However, claims arising out of the disability may be excluded if the insurer can justify that the condition represents an increased risk. A travel insurer may also exclude cover in relation to a medical condition existing before or at the time the contract is made. This means that if you have a pre-existing condition of, say, schizophrenia, and you experience symptoms whilst you are on holiday, your insurer may refuse you cover for treatment of this particular condition. If the claim is not connected to the disability it should be paid as normal.
If a person who has experienced mental health problems takes out a travel insurance policy, they are offered the standard policies available from travel agents (which almost always exclude pre-existing conditions, including mental health problems), or a specialist policy that gives full cover but costs far more money.
If you have a mental health problem (or have experienced mental health problems in the past) be aware that holidays are often sold with standard insurance policies which have exclusions in the small print. These policies are more or less useless if you then try to take out a claim for anything which might be connected to your mental health problem (or any other pre-existing condition) while on holiday.
Life insurance
If life insurance cover is refused or premiums are increased, the insurer would need to show that the disability or medical condition would directly affect life expectancy. In cases of ‘severe mental health problems’ (such as schizophrenia), the insurer could argue that this diagnosis increases the risk of suicide.
Fresh Finance UK (formerly Ivan Massow) specialises in life insurance for socially excluded groups, including people with mental health problems. See the Useful contacts section in this factsheet for information about how to contact the company, and the Recent initiatives section for details of their ‘Loonscape’ services.
Motor insurance
There is no national policy with regard to motor insurance for people who experience mental health problems. The Association of British Insurers says the decision is up to the individual insurance companies, who may exercise discretion about whether or not they provide insurance or only offer it at a higher premium.
It seems that if the DVLA approve the driving licence then an insurance company may agree to insure the individual involved; they may, however, charge a higher premium depending on the circumstances.
Complaints
When to make a complaint
Complaints about insurance can be made to the Financial Ombudsman Service (FOS). The FOS covers all financial services provided in or from the UK.
You would make a complaint after having complained to your insurance provider. The FOS receives a large number of complaints, so the process may be lengthy, especially if an informal agreement cannot be reached with the insurer. Fifty percent of complaints are resolved informally at the earliest stage, and between a third and a half of cases that require a formal decision from the FOS are resolved in favour of the consumer.
The FOS provides a telephone interpretation service for those who prefer to conduct the process in a language other than English, as well as materials in a range of languages. Their materials are also published in the following formats: Braille, large print and audiotape.
For details of how to contact the Financial Ombudsman Service, please see the Useful contacts section of this factsheet.
Legal redress
You may also wish to seek advice about possibly taking out a case against an insurer under the Disability Discrimination Act 1995.
If you decide upon this route, you will need to seek legal advice from a solicitor who specialises in disability legislation. The first step is to establish with the solicitor whether or not the law can help you and whether or not your case is likely to succeed.
Mind has a list of solicitors who specialise in disability; for more information contact MindinfoLine. The Law Society can also advise on suitably qualified solicitors (see Useful contacts for details of both organisations).
Recent initiatives
MDF The Bipolar Organisation (formerly the Manic Depression Fellowship) Travel Insurance Scheme
MDF The Bipolar Organisation set up the first travel insurance scheme for people with mental health problems (specifically manic depression or bipolar disorder). The organisation liaised with brokers to arrange travel insurance for people who are MDF members. The policy covers manic depression as a pre-existing condition, which most insurers will not. Please not that only members of MDF The Bipolar Organisation are eligible for this service and that bipolar disorder (or manic depression) is the only condition it will cover. A year's membership to MDF costs £18. See Useful contacts for details.
MDF has outlined the importance of helping insurance firms understand that many people diagnosed with a mental health problem are not high risk clients.
Rethink
Rethink gives information on insurance through a section of its website. This includes lists of insurance companies and brokers who provide cover for customers with mental health problems. You can also contact the Rethink Advice Service with insurance queries (see Useful contacts for details).
Loonscape
Loonscape was set up by Fresh Finance UK (formerly Ivan Massow) to provide access to financial services, including insurance, for people with mental health problems. Loonscape also conducts research, most recently a paper on mental health and social exclusion, which gives examples of service users’ experiences and makes recommendations to financial services providers. Neither Loonscape, not the parent company, Fresh Finance, provide travel insurance. Loonscape works alongside other organisations and its website acts as a gateway to a range of financial products and services.
Useful contacts
Insurance Code of Practice and Complaints
Association of British Insurers (ABI)
51 Gresham Street
London EC2V 7HQ
tel: 020 7600 3333
fax: 020 7696 8999
email: info@abi.org.uk
web: www.abi.org.uk
Financial Services Ombudsman
South Quay Plaza
183 Marsh Wall
London E14 9SR
tel: 0845 080 1800
email: complaint.info@financial-ombudsman.org.uk
web: www.financial-ombudsman.org.uk
The Law Society
The Law Society's Hall
113 Chancery Lane
London WC2A 1PL
tel: 020 7242 1222
web: www.lawsoc.org.uk
The law society cannot give legal advice. It can direct enquirers towards solicitors who specialise in disability discrimination legislation and has an online database of solicitors at www.solicitors-online.com
MindinfoLine can also give details of solicitors who specialise in this area of the law (see the ‘Information services’ list below).
Information services
MDF The Bipolar Organisation
Castle Works
21 St. George's Road
London SE1 6ES
tel: 08456 340 540
email: mdf@mdf.org.uk
web: www.mdf.org.uk
MDF The Bipolar Organisation Cymru
22-29 Mill Street
Newport NP20 5HA
tel: 06346 340 080
email: info@mdfwales.org.uk
web: www.mdfwales.org.uk
MindinfoLine
Mind
PO Box 277
Manchester M60 3XN
MindinfoLine is open Mondays to Fridays 9.15am to 5.15pm
tel: 0845 766 0163
email: info@mind.org.uk
We can give details of Legal Network solicitors who specialise in advising about claims under the Disability Discrimination Act
Rethink
Head Office
30 Tabernacle Street
London EC2A 4DD
National Advice Service tel: 020 8974 6814
email: advice@rethink.org or info@rethink.org
web: www.rethink.org
Insurance Services
The companies whose details are given below have assured us that they will not exclude people solely on the basis of having a mental health problem, either currently, or in the past. It is their policy to look at the merits of each case. However, they may wish to obtain a medical report from your general practitioner or psychiatrist.
Please note that Mind is unable to specifically recommend any of the insurance services listed below; their details are given purely for information purposes.
Bureau Insurance Services
Charter House
43 St Leonard’s Road
Bexhill-on-Sea
East Sussex TN40 1JA
tel: 01424 220 110
email: cover@bureauinsure.co.uk
web: www.bureauinsure.co.uk
For non-standard household, life and travel insurance
Free Spirit
PJ Hayman and Company Ltd
Stanstead House
Rowlands Castle
Hampshire PO9 6DX
tel: 0845 230 5000
email: freespirit@pjhayman.com
web: www.free-spirit.com
For travel insurance
Jeffrey Flanders Ltd
The Old Barn
Vicarage Hill
Loxwood
Billingshurst
West Sussex RH14 0RH
tel: 08703 300 2001
For all types of insurance except for travel
MIA Online Ltd
PO Box 2109
Rayleigh
Essex SS6 9WH
tel: 01268 783383
email: info@miaonline.co.uk
web: www.miaonline.co.uk
For travel insurance
MDF The Bipolar Organisation
Castle Works
21 St. George's Road
London SE1 6ES
tel: 020 7793 2600
email: mdf@mdf.org.uk
web: www.mdf.org.uk
For travel insurance
Privilege Insurance
3 Edridge Road
Croydon
Surrey CR9 1AG
tel: 0845 246 0515
web: www.privilege.com
Primarily for motor insurance
This factsheet was updated by Rachael Twomey, October, 2005.
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