Claims handlers in the disability insurance sector are faced with growing challenges – the growth in claims for benefits, the increased complexity of claims assessments due to an increase in diagnoses of psychiatric disorders, repeated reviews, and often low return-to-work rates have all permanently changed claims assessment. What can insurers now do to meet the increased requirements effectively?

The growth in the absolute number of claims for benefits is easy to explain. The combination of ageing of the portfolio and stable portfolio size has led to an increase in the number of claims for benefits. This effect is even greater in companies with growing new business.

One of the causes of the increase in the ‘mental disorder’ benefit trigger is quite simply an increase in the number of mental disorder diagnoses. The reasons for this vary. One important cause is to be found in the growing psychomental stress in an increasingly complex working environment, which, because of flexibilisation and work intensification, presents high mental demands across all professiona.¹

Mental disorders have not only become the second most common cause of sick leave– they are now also the most common cause of early retirement due to illness. Retirement due to mental illness also occurs significantly earlier compared with other diagnostic groups.²

For insurance companies, this results in slower case-processing, which understandably leads to dissatisfaction among customers, thereby impacting the disability insurance product’s rating on relevant internet rating sites. Against this background, the important question is how these challenges can be overcome.

We propose three things in this regard: 

Because of the growing number of mental disorder diagnoses and the associated increased complexity in the area of claims assessment, handling the claims quickly and efficiently becomes particularly important. Here, rule-based automation solutions are being used, including our claims risk assessment tool CLARA – once a claims notification has been received, it prepares a rule-based telephone interview. This makes it possible for the claims handler to assess the degree of difficulty of the claim right from the outset. The benefits for insurers and clients are obvious: 

• Increased customer satisfaction: CLARA helps claims handlers to manage claims in a structured, consistent way that is also understandable for third parties. Rule-based queries mean that even less experienced employees can already record all the individually relevant data during the initial contact, speeding up the initial assessment. But the range of solutions on offer goes even further: where defined criteria are present, unequivocal benefit cases like certain cancers can be identified as part of a “pay and finalise” procedure and promptly approved as early as the first enquiry about the cause of the claim. 
  
• Increased efficiency: Leaner claims-handling processes free up resources – it has already been possible to achieve an average reduction of 50% in claims handling times. The involvement of external service providers can also be managed in a targeted, efficient way. The freed-up capacities can be used for complex and expensive cases, or for reviews.
  
• Data analytics: CLARA paves the way for digitalised claims assessment and helps insurers to use collected data for portfolio optimisation. The tool makes it possible to analyse all claims data, including from rejected applications. This serves as a basis for the targeted use of data analytics, for example by identifying claims trends and their consequences for product development and pricing. 

The range of automated solution approaches for claims handlers is still increasing, however: through rule-based support, frequent claims diagnoses – including from the complex psychiatric spectrum – can be compared against the requirements of the respective job so well that the claims handler is supported more than merely in assessing the degree of disability. Indeed, the claims assessment process has also been improved by increased transparency with decisions, and by prioritising the essential medical aspects that reviews are expected to focus on.

There are various ways of identifying risks of mental disorders early on and taking preventive measures. One way is to complement claims assessment with modern performance management.Insureds could, for example, seek advice from an external provider in a crisis, or learn strategies to boost their own mental resilience. In many cases, the offer alone is sufficient to increase the performance of the individual concerned.

The onset of new illnesses can often be prevented and the number of chronic illnesses that lead to people giving up work reduced. A variety of measures in the Netherlands has had a positive impact on the number of early retirements. According to the OECD, the number of disability benefit recipients there was among the highest in the world in 2002. Reforms led to the number of new disability benefit recipients falling by 60% within a few years³. The fall in the number of benefit recipients was achieved in part through the following measures:

• The so-called “Gatekeeper Improvement Act” (Wet Verbetering Poortwachter, WVP) requires everyone involved in the reintegration process to comply with a standardised procedure. 
  
• Employees and employers take part in drawing up a back to work action plan, which must be completed within eight weeks of absence. If the reintegration efforts are deemed insufficient, the state insurer (UWV) may require that payments continue. 
  
• The level of the employer’s pension contribution rate is calculated on the basis of the company-specific losses – high losses lead to high contribution payments, and vice versa. 
  
• The length of paid sick leave was increased from 12 to 24 months, which resulted in a significant expansion of company reintegration programmes. 

Studies show that – also in comparatively well-developed care systems like Germany and the limitations due to mental disorders that are seen as particularly detrimental – fewer than half of those affected by mental disorders are receiving treatment.⁴ Lack of information, stigmatisation, and uncertainty among those affected as to whether they have a condition that requires treatment are the biggest obstacles in this regard. Moreover, the number of medical specialists and psychotherapists is not even close to enough to provide all the treatment required.

It is undeniable that the early introduction of proper therapy has a positive impact on the severity of the symptoms of mental disorders. This potential for improved information, screening, treatment and aftercare has paved the way for a large variety of digital offerings (digital mental health) that provide easier access for the individuals concerned and thus close the gaps in provision. As digital offerings serve the areas of information, screening, treatment and aftercare, they are relevant to all aspects of preventing mental disorder claims.

Although many international studies have already demonstrated the effectiveness of digital treatment offerings in research projects⁵, we have yet to see these solutions being incorporated into healthcare practice. For the disability insurance sector, cooperation with digital health start-ups is a promising approach, since it has the potential to not only influence the course of an illness but also create access to a target group – young users who are conscious of their health.

Actively help us to shape this change

Modern prevention concepts and digital approaches in the area of automated claims assessment are the keys to successful market orientation. Munich Re has interdisciplinary expertise in the areas of medical consulting, claims, underwriting and data management, as well as cross-market experience as a leading driver of innovation topics in the insurance industry. Our expertise helps insurance companies adapt to new market conditions in the age of digital transformation.

¹ Schütte, M. and Köper, B. Bundesgesundheitsblatt (Federal Health Bulletin) (2013) 56:422   422 ² Deutsche Rentenversicherung – Positionspapier zur Bedeutung psychischer Erkrankungen (German pension insurance – Position paper on the importance of mental disorders), 2014 ³ Estimating the effects of recent disability reforms in the Netherlands, Jan-Maarten van Sonsbeek and Raymond Gradus, VU University Amsterdam, https://www.researchgate.net/publication/272300560_Estimating_the_Effects_of_Recent_Disability_Reforms_in_the_NetherlandsDe Boelelaan 1105, S.7  ⁴ Psychische Störungen in der Allgemeinbevölkerung. F. Jacobi et.al. Nervenarzt (2014) 85;77 ⁵ David Gratzer and Faiza Khalid-Khan. Internet-delivered cognitive behavioural therapy in the treatment of psychiatric illness. CMAJ, November 2015 DOI: 10.1503/cmaj.150007