Traditional insurance – Why does it fail to engage?

January 13, 2025
10:23 am
Tarmo Pihl

When you break a leg, there is no hiding it; it is evident to you and others around you that you need expert attention and medical support for a certain amount of time. And it is also evident that you will receive coverage from your insurance.

However, some problems are much sly than others, issues that are much less obvious, even to yourself. For those, seeking expert support is an entirely different process that still demands courage, time, and money.

It takes courage to brave the stigma, time (and patience) to find the right expert, and money to cover the costs. Indeed, despite recent progress, mental health coverage with traditional insurance is still closer to the obstacle course than a day at the spa. That could explain why the gap between the number of employees known to be needing mental health attention and the actual number of traditional insurance claims made for mental health issues is so significant.

In this piece, we explore the reasons for the engagement gap. You can read our earlier piece here to understand more about traditional insurance.

THE ENGAGEMENT GAP

Let’s look at some telling numbers.

More of us than we think suffer from mental health problems.

One in six people suffer from mental health issues at work, according to recent data. That is more than 14% of your workforce. That means that if you run a team of 15 people, two of your team members are probably battling anxiety, stress or other conditions.
In a piece from May 2023 by McKinsey, almost 25% of the employees, at one point or another, require moderate mental health need support. That is practically 1 in 4 employees.

But having insurance does not automatically mean your employer’s got you covered.

In the USA, 57% of insured Fifty-seven per cent of insured Americans seeking help for mental health issues for the period 2019-2022 did not receive treatment.

The same source shares that 80% of surveyed US employees had to get help outside their health plan “all the time”.

The obstacle course that is finding a mental health specialist adds to the already existing issue

Why such a wide gap?

Traditional insurance challenges can be various, but the two main ones remain the complexity of usage and the lack of qualified mental health specialists available.

I – Traditional Insurance is complicated to navigate regarding Mental Health.

Traditional insurance companies are, by definition, traditional. They are also primarily large companies where change is always more complicated. Adapting to the ever-growing number of people seeking mental health support is coming too slowly, leading to underutilization of their services.

Figuring out if your insurance covers your particular situation is the first step of a long journey. Insurance policies are notorious for being long, intricate documents with a lot of fine print. Some conditions are still entirely left out of the insurance policies (such as cognitive behavioural therapy or counselling) and will demand additional costs. Something as familiar as “stress,” for example, is not classified as a medical condition in the UK, the USA and many other countries. In contrast, many GIPs (Group Income Protection) will reject whatever issue is not classified as a medical condition.

You are eligible! Even then, the process remains often complex and cumbersome. You are required to fill out forms and wait for assessments. All of which are even more difficult to handle when you are suffering from anxiety, stress or burnout.

Most of the time, there are few accepted practitioners on the list provided by the insurance policy. They might not be the right fit for you and are often overbooked. It might take several trials to find one that fits your needs. But when you are suffering from mental health problems, time is of the essence. The earlier you seek and receive help, the better your chances are of recovering and getting your situation under control.

If you are lucky enough to find a specialist who can take you in, more often than not, there is a limit to the number of sessions that will be covered. But mental health is not like a broken leg. It’s not always clear when what is broken is healed.

Finally, it often takes a long to get your money back. In addition, claiming might mean you will have to pay a premium next time.

Discouraged and pressed with time, a lot of people end up going to general practitioners who are not equipped to handle mental health issues in the long term, or worse, give up entirely on seeking care.

paperwork and mental health issues dont mix well

II – Quality mental health professionals are difficult to come by and retain

Mental health coverage still seems like a “new” topic for many companies, and there is not yet a clear internal process and common language between the Human resources department, Risk Management Officers, and Insurance providers to allow smooth …

Most Western countries today suffer from a lack of trained professionals in the health sector, including mental health professionals, and even more so, mental health professionals specialised in issues related to the work environment. Funding and trained staff are difficult to come by in the public sector, making the existing qualified professionals very busy and overworked themselves.

Many mental health professionals are sometimes reluctant to become part of an Insurance coverage network as some of them require a lot of paperwork, are slow to pay back and have specific limitations on care.

A NEW GENERATION OF SOLUTIONS

Identifying this need for Insurance industry disruption and more customer-centric offers, a new generation of more agile digital applications is now addressing these issues and modernizing legacy insurance systems.

These insurtech platforms, such as Siffi, are built for today’s and tomorrow’s employees’ needs:

accessibility
privacy
personalization
seamlessness
agency

They also work as prevention resources rather than just to put out fires.

These new tools and services target a much wider group of employees and work to reduce the insurance customer engagement gap (often seeing engagement rates between 15 and 25%) left by traditional insurance companies.