Regulators Call for Action on TPD Insurance Sustainability

During the roundtable, participants acknowledged that the challenges facing TPD insurance are significant and likely to persist without proactive measures. A key concern highlighted was the deteriorating claims experience across both group and retail markets, driven particularly by the increasing incidence and complexity of mental health-related claims. This trend has led to affordability issues for consumers due to rising premiums and increased financial volatility for insurers.

Discussions focused on the need for product redesign to better reflect modern work environments and recovery pathways. Participants explored the possibility of developing products that account for episodic work capacity and evolving patterns of employment. While some insurers are already piloting new approaches, legislative constraints were noted as limiting the scope for broader product redesign.

APRA and ASIC emphasised that insurers should not delay taking actions within their control. They urged insurers to ensure that products are designed around the needs of their intended target market and to engage proactively with superannuation trustees to improve member outcomes. The regulators also highlighted the importance of robust reserving and pricing practices to keep pace with evolving claims experience and emerging risks.

For consumers, these developments underscore the importance of understanding the terms and conditions of TPD insurance policies. As the industry works towards more sustainable and responsive products, policyholders should stay informed about potential changes and consider consulting with financial advisors to ensure their coverage aligns with their needs and expectations.