‘Micro-Losses’ and Mental Health: How Telehealth and Digital Apps May Help Us Close the Wellness Gap

By: Terri Rhodes | May 16, 2021

Terri L. Rhodes is CEO of the Disability Management Employer Coalition. Terri was an Absence and Disability Management Consultant for Mercer, and also served as Director of Absence and Disability for Health Net and Corporate IDM Program Manager for Abbott Laboratories.

I have written a lot over the years about mental health, and I’m proud to say that DMEC is one of the pioneers in promoting and helping employers recognize its impact in the workplace.

I’m also happy to report that as we recognize Mental Health Awareness Month this year, employers and the larger society have a new level of understanding and recognition regarding the impact of mental health. Perhaps even more important, we seem to be on the cusp of widespread awareness. We have found that there is no separate and distinct “mental health,” just as there is no separate “physical health.”

There is simply health and wellbeing.

But before we think all is well, I read some startling statistics from a recent survey conducted by Unmind and Welcoa. The survey indicated that:

90% of employers recognize employees are experiencing burnout.
Almost 40% of employees say their mental health has been impacted by COVID-19.
65% of employers feel their businesses will be negatively impacted by mental health issues and business performance over the next 12 months because of COVID-19.
Many companies are failing to develop a mental health strategy because of lack of senior leadership buy-in and budget.

Traditionally, employers turned to their employee assistance programs (EAPs) for support, but during the pandemic, they fell short.

While usage was up, it became evident they were not equipped to deal with the unique and increased needs experienced during the pandemic. One size does not fit all. Many EAPs have included legal, financial and elder and childcare options, but there is a utilization problem, and we are not addressing the access issues in this country.

This is where digital apps have somewhat closed the gap. Today, there are more than 380,000 health apps available through Apple and Android stores, and around 20,000 of them address mental health, according to the European Connected Health Alliance.

The stresses produced by the pandemic, including among those fortunate enough to be able to work from home, have spared few workers.

One size does not fit all. Many EAPs have included legal, financial and elder and childcare options, but there is a utilization problem, and we are not addressing the access issues in this country.

While the virus has forced people into isolation, nearly all the symptoms associated with isolation have been shared. This includes stress, depression and anxiety. Employees up and down the ladder have also shared the responses they have used to address these issues — increased alcohol and other drug use, unhealthy eating habits, overwork, etc.

As time goes on, we’ll see the full costs of these sub-optimal coping mechanisms.

The upside of these across-the-board stresses is a more broadly understood need for resources to address mental health issues and the life events that drive them.

Relaxed work-from-home rules, online yoga and other programs, subsidies for children’s camps and other activities, and telehealth and EAP promotion are just some of the initiatives employers have implemented during the pandemic. Many large employers have announced these and other changes and benefits are here to stay.

The second major factor driving greater mental health awareness is that which drives so much change — generational turnover.

In a study conducted by The Standard, it stood out that the younger generations in the workforce are reporting mental health issues (59% of millennials and 71% of Gen Z). This sends a strong message that we need to get ahead of this.

Millennials and Gen Zers — those born between 1981 and 2015 — are more open about acknowledging and discussing their own mental health struggles. This is reflected in the high numbers of people in these generations who will tell researchers about their issues.

A June 2020 survey of U.S. adults conducted by the Centers for Disease Control and Prevention showed:

40% are struggling with mental health or substance abuse.
13% started or increased substance abuse.
31% report anxiety/depression symptoms.
26% reported trauma/stressor-related disorder symptoms.
11% seriously considered suicide, including 25.5% of adults 18-25.

Many of these issues stem from “micro-losses,” such as school and graduation cancelations, isolation, financial insecurity and an unstable job market.

Yet younger generations are not convinced employers want to help them address their issues. A survey by Businessolver shows that 76% of millennials and 73% of Gen Zers believe companies view those with mental health issues as a burden.

This is part of an “empathy gap” that has grown during the pandemic. In 2020, 84% of Gen Zers saw their employers as empathetic, but that number fell to 68% in 2021.

Here are a couple of easy and cost-effective ways employers can help.

Telehealth

According to Businessolver, only 29% of HR professionals say their companies provide access to online mental health services or clinics.

This means there is a tremendous opportunity for employers to expand access to these services, delivered in the way many and perhaps most employees are most comfortable using them.

Telephonic and video counseling and therapy are private and convenient. They can reduce the time employees take off work. Even more, their relative ease of use enables preventive care. Over time, this has the potential to substantially reduce absence and disability and its costs.

States generally require people to work with mental health providers licensed in their states. Some state governments are considering changes to these laws. That and other reforms to increase supply and access would make remote mental health services even more attractive to employers and employees.

But even without these changes, telehealth’s potential benefits far outweigh its costs.

Apps

The pandemic has seen an explosion in mental health-related applications employees can download to phones and laptops.

More are being added every week. These include mindfulness exercises, stress relief, meditation and, most significantly, apps that connect employees to therapists. These apps often provide free assessments, enable users to connect with a therapist at any time, and allow them to easily change therapists to find the right fit.

These apps, as potentially helpful as they are, do present challenges.

They are usually not designed for serious mental illness, but rather, for the more common issues — stress, anxiety, insomnia, etc.— many employees experience. There are potential privacy concerns, and currently there’s no real way to measure outcomes and quality.

All of which argues for greater employer involvement in this burgeoning industry. Especially if they are directly or through insurance, indirectly reimbursing costs, employers can help influence the direction this sector takes.

The pandemic has brought about many changes. But, even more, it accelerated those already underway.

This includes how we view and address mental health.

More and more individuals are acknowledging their struggle with mental health, which means we need to be thinking about how to address mental health before it becomes the second pandemic. As we start to bring our workforce back to the office, employers have a unique opportunity to advance this pandemic-induced change and reap the benefits of a healthy workforce. &

How a Carrier Partner Can Help Navigate a Challenging Management and Professional Liability Market

A combination of a choppy economy with increased claims frequency and severity could lead to rate increases in the Management & Professional Liability market.

Rates in the management & professional liability (M&PL) markets were on the rise from 2020 to early 2023 and are now falling rapidly.

M&PL divisions manage a number of different insurance products including management liability (D&O), professional liability (E&O), employment practices liability (EPL), fiduciary liability policies, cyber, etc. In 2023 and into 2024, a big influence on the marketplace has been the extremely aggressive and softening public company D&O market.

Though these rates have been softening for management liability, that may change over the next few years as companies continue to adjust their business models motivated by economic uncertainty. Layoffs were up nearly 200% last year, Forbes reported, even as other recession indicators, like the inflation rate, improved. A recession could lead to an increased claim activity and force carriers to raise rates.

“Whenever there is a meaningful downturn in the economy, we tend to see claim frequency pop up,” said George Schalick, Jr., senior vice president of the Management and Professional Liability Division at Philadelphia Insurance Companies (PHLY).

With continued fiscal uncertainty, businesses potentially already burdened with pandemic-related claims should seek a carrier with a long history in M&PL products. They will provide much-needed risk management guidance and be better positioned to support their insureds during market fluctuations.

Why Insureds Might See an Uptick in M&PL Claims

George Schalick, Jr., Senior Vice President of the Management and Professional Liability Division, Philadelphia Insurance Companies

The current soft market might come as a bit of a surprise as it does not track with previous underwriting cycles and economic conditions. Afterall, many privately held and non-profit organizations struggled during the early days of the pandemic with shutdowns and rapidly declining revenues. But the Government assistance programs, like the Paycheck Protection Program loans, helped keep many afloat during the tough times.

“During COVID many organizations stopped doing business until they were able to sort out all of the health and safety challenges,” Schalick said. “They were forced to lock down, but then all the government assistance programs allowed them to keep people employed. The increased volume of claims we anticipated we would see coming from the lockdowns and restrictions that were imposed upon businesses in the U.S. didn’t manifest at first.”

“Just because there wasn’t an onslaught of reported claims at the beginning of the pandemic, doesn’t mean the circumstances that would give rise to a claim being reported didn’t occur. Courts and the judicial system were closed or slowed and now that they are back open, we’re starting to see the circumstances that occurred during the COVID lockdowns becoming claims today,” Schalick said. “Litigation is progressing.”

Added to the delayed pandemic litigation is a concern over newer claims that might be filed as the country inches toward an economic downturn. Though a recession was avoided in 2023, experts think a soft dip could occur in 2024, with 76% of economists saying there’s a 50% or less chance of an economic downturn this year — that almost always results in more management liability claims.

“During the Great Recession in 2008, we saw an almost immediate spike in claims because of the economic conditions and the pressure it placed on organizations. They were making personnel changes with significant belt tightening almost immediately.” Schalick said.

What’s in Store for M&PL Policy Rates in 2024?

Despite an uptick in claims and increased economic uncertainty, management liability rates haven’t increased, resulting in market-wide pricing levels that may not meet the increased pressure of rising settlements and jury verdicts.

“Rates are going the other direction and settlement values are not falling,” Schalick said.

The mismatch between rates, claim frequency and severity is, in part, because carriers experiencing the dramatic soft market in the public D&O market are seeking premium gain in the private and non-profit market.

“In the public company market, the rates have been decreasing significantly. The rates were increasing in the private, not-for-profit market, and rightfully so, but there’s a desire to supplement overall mid-size D&O for carriers who also write private not-for-profit, and they see that as an opportunity to aggregate premium,” Schalick said. “So the always competitive landscape in the private, not-for-profit market has dramatically increased in the last 18 to 24 months.”

Still, companies of all sizes and types should be concerned about management liability rates in the future. Legal system abuse is resulting in increases in both the amount of litigation and the size of verdicts plaintiffs are receiving.

Certain areas of the country are particularly vulnerable to this type of legal system abuse. As a result, insureds in these localities are likely to be vulnerable to rate increases.

“The environment is so positive for the plaintiff that forces premium increases so carriers are able to stay in that market long term,” Schalick said.

Why a Tenured Carrier Partner Can Help Insureds Navigate An Uncertain Market

It’s clear that insureds are facing an uncertain M&PL market over the next few years. Fortunately, carriers with a long history in the M&PL space will be there to offer stability.

Philadelphia Insurance Companies has been supporting this market for 35 years. PHLY is committed to offering long-term rate stability, even as economic and claims trends start to push premiums upwards. They have an appetite for all sorts of companies, large and small, for-profit and nonprofit alike.

“We’ve been at this game for a long time and are one of the most tenured underwriters in this space,” Schalick said. “We like to stay very consistent.”

PHLY has worked with both for-profit and non-profit on management liability policies. With dedicated M&PL teams throughout the company’s 13 regions, PHLY provides the support agents and brokers are looking for on behalf of their clients. The teams know their regions well and can respond to local trends. They’re also dedicated to making the renewal process as easy as possible for their partners and policyholders.

“We have real confidence in our results, so we focus a lot on making the renewal experience as painless as possible for all agents and insureds,” Schalick said.

The company is also investing in tools to help insureds avoid losses. Earlier this year, they launched a new online risk management platform, PHLYGateway, which offers resources for insureds on how to create an employee handbook and trainings on issues such as recognizing workplace sexual harassment and discrimination.

If insureds have questions, they can consult a Best Practices Help Line, provided via the platform. That way, they can get on the spot risk management guidance to help them prevent claims.

To learn more, visit: https://www.phly.com/mplDivision/managementLiability/default.aspx.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Philadelphia Insurance Companies. The editorial staff of Risk & Insurance had no role in its preparation.

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