How can insurance meet workers' comp's mental health claims challenges?

Recent years have seen a rising number of mental health related workers’ compensation claims. The trend could suggest that brokers might broaden their appeal to SMEs and other businesses by improving their knowledge of mental health services, including new offerings from insurers.

Last month, Zurich Financial Services Australia (Zurich) announced new commitments to improve its understanding of mental health conditions, including a proposed collaborative research project with mental health advocates and health insurers.

The motivation, said a media release, is to improve underwriting, claims and prevention services.   Another likely motivation is increasing costs. In a 2023 analysis, Safe Work found that the average mental health related payout costs nearly $60,000, about four times physical injury compensation. Those costs continue to increase.

What types of mental health workers’ comp claims are increasing?

“In recent years, we have witnessed a noticeable increase in mental health-related workers’ compensation claims,” said Matt Paterson (pictured). “This is in line with broader trends being observed across workers’ compensation nationally.”

Paterson is chief claims officer for Zurich Australia & New Zealand.

He said the increases in Australia are across mental health claims relating to workplace bullying, harassment and performance management issues. However, physical injury claims, he said, more often than in previous years, are also becoming mental health claims.

“Workers will also often report a physical injury first, which is then followed by difficulties managing pain and related symptoms, and subsequently, the development of mental health issues such as depression, anxiety or stress,” said Paterson.

Workers’ compensation claims are also reflecting the increasing numbers of people reporting issues with anxiety.

“We have also observed cases where injured workers become concerned about return-to-work prospects, which can result in anxiety,” said Paterson.

Mental health conditions can often require longer treatment periods compared to physical injuries, he said, which can result in higher medical expenses.

“The need for specialists such as psychologists and psychiatrists can also add to the overall cost,” said Paterson.

A range of recent studies support Paterson’s evidence from Zurich’s claims.

In December, the Council of Australian Life Insurers (CALI) and KPMG, with contributions from more than 15 insurance firms, published Australia’s Mental Health Check-Up. Data in that report showed that the frequency and severity of mental health issues in the country is rising exponentially, particularly for workers aged 30 to 40.

Zurich’s initiatives

Zurich currently offers workers’ compensation cover in Western Australia and Tasmania, with experts in those states supporting injured workers through the duration of their claim.

There’s also wider support on offers geared towards prevention. Paterson said that includes workers’ compensation assessments, where mental health risks are discussed and the insurer provides strategies to manage them. Zurich also has an app that can help workers reduce stress and other mental health challenges at work.

For workplaces, there’s a ‘Wellbeing Vibe’ test. This test assesses an organisation’s approach to wellbeing based on the International Organisation of Standardisation (ISO) 45003 measure of psychosocial risk in the workplace.

“Zurich also provides training programs to help employers recognise and address mental health issues, particularly in cases where mental health claims have been submitted,” said Paterson.

Paterson is confident that Zurich’s Mental Health Roundtable – a forum for insurance professionals in the health and life sectors together with mental health experts – can help his firm deal with some the growing mental heath and workers’ compensation issues it faces.

“It is a critical avenue for facilitating the meaningful and ongoing evolution of Zurich’s products and services, including in the workers’ compensation space,” he said.

He hopes the roundtable will help claims advisers identify and address mental health issues earlier and provide timely, proactive support. Ultimately, he said, this can enhance return to work programs, including mental health support, to smooth the transition back to work for injured workers.

Comcare review

Paterson was optimistic about current government initiatives in the workers’ compensation area.

“We are also seeing dynamic and evolving legislative and regulatory changes to workers’ compensation, influencing claims trends and creating uncertainties for employers,” he said.

An independent panel of experts appointed by the government is currently reviewing the Comcare scheme. The review is considering how to improve and possibly expand this national workers’ compensation arrangement that was launched in 1988.

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