Australians with total and permanent disability (TPD) insurance could face higher premiums or reduced cover if life insurers do not address growing pressure on the product.
That was the key issue discussed at a joint CEO roundtable hosted by the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) on 15 April 2026. The meeting brought together senior representatives from 19 life insurers and reinsurers, as well as Treasury and the Council of Australian Life Insurers.
TPD insurance is designed to provide financial support to Australians experiencing permanent disability and mental ill-health. But insurers at the roundtable said claims experience has worsened across both group and retail markets, with mental health-related claims becoming more frequent and more complex.
Those trends are putting pressure on both sides of the market. Consumers are facing affordability issues as premiums rise, while insurers are dealing with greater financial volatility.
APRA and ASIC said the challenges facing TPD insurance are “significant and likely to persist without action.” The regulators urged insurers to move on issues they can already control, rather than waiting for broader legislative change.
A major part of the discussion focused on whether current TPD products still reflect how people work, recover, and manage long-term health conditions. Participants discussed the need for products that better account for “recovery pathways, episodic capacity and evolving patterns of work.”
Some insurers are already exploring or piloting new approaches under the current settings, although participants said legislative constraints continue to limit the scope for wider product redesign.
APRA acknowledged that legislative changes could help, but said insurers should not delay action in areas within their control. ASIC also said insurers must make sure products are designed around the needs of their intended target market.
The group insurance market presents its own challenges because TPD cover is often provided through superannuation. Participants said superannuation trustees play a central role in member outcomes, but changes in claims patterns are often dealt with through higher premiums or reduced cover instead of deeper product redesign.
That reflects the competing priorities trustees face, as well as the time and resources needed to make more complex product changes. APRA and ASIC encouraged insurers to keep working with trustees and said they were open to helping facilitate joint efforts between insurers and trustees.
In the retail market, APRA and ASIC noted some industry movement towards new TPD product designs. However, participants said take-up remains low, with existing products still dominant in the adviser-led market.
The discussion also raised questions about whether existing products are priced properly against the latest TPD risk profile. APRA said insurers need robust reserving and pricing practices so their assumptions keep pace with claims experience and emerging risks.
APRA and ASIC said they would continue to support industry efforts to address the sustainability challenges facing TPD insurance, with consumer needs in mind.
