APRA Calls for Sustainable Reforms in Income Protection Insurance
APRA Calls for Sustainable Reforms in Income Protection Insurance
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The Australian Prudential Regulation Authority (APRA) has expressed concerns regarding the sustainability of income protection insurance, following significant losses within the industry.
Over a five-year period, insurers have reported losses totaling $2.5 billion on this product.
APRA has directed life insurers to address issues related to individual disability income insurance (DII) to enhance the product's viability. Geoff Summerhayes, APRA's Executive Board Member, noted that while insurers have been aware of these challenges, their efforts to resolve them have been insufficient.
In a competitive market, insurers have focused on attracting policyholders through pricing and product features that are not sustainable, leading to ongoing losses and suboptimal customer experiences. APRA's intervention aims to prompt insurers to develop more sustainable practices, ensuring the long-term availability and reliability of income protection insurance for Australians.
For consumers, this development highlights the importance of selecting insurers committed to sustainable practices. Engaging with providers who prioritize long-term stability can offer greater assurance that income protection policies will deliver the intended support when needed.
Published:Friday, 2nd Jan 2026 Source: Paige Estritori
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Subrogation: An insurance carrier may reserve the "right of subrogation" in the event of a loss. This means that the company may choose to take action to recover the amount of a claim paid to a covered insured if the loss was caused by a third party.
