The Australian Prudential Regulation Authority (APRA) has told the actuarial profession that total and permanent disability (TPD) insurance faces a sustainability problem it cannot solve through technical adjustments alone, with the regulator pointing to mental health as a claim type the product was never structured to handle at scale. Jane Magill (executive director, life, private health insurance, and superannuation) made the remarks at the 2026 All Actuaries Summit, where she outlined what APRA regards as three interlocking failures across the TPD market: how claims are managed, how the product is designed, and whether the parties that control it are aligned on the need for change.
The numbers underpinning APRA’s concern come from CALI data showing that mental health now accounts for one in three TPD claims paid. Among Australians in their 30s, the rate of TPD claims linked to mental health has risen by more than 700% over the past decade – a trajectory Magill described not as a volume problem but as evidence that the product’s foundational assumptions no longer hold. “TPD is now being asked to solve an issue it was never built to address. Progress now requires more than technical skill. It calls for a change in perspective, creativity, agility, and coordination across disciplines,” Magill said.
Magill’s remarks drew on two pieces of regulatory work: a thematic review of insurance risk management practices across the industry and a CEO roundtable that APRA and the Australian Securities and Investments Commission (ASIC) jointly convened. Both exercises pointed to the same fault lines. In claims, APRA found that the function has not kept pace with the changing profile of the people making claims. Handling complex mental health claims requires different skills and processes than the physical disability claims TPD was originally built around. Magill said resourcing – both headcount and technical capability – has not matched the shift in claim type.
On product design, the lump-sum structure that defines TPD creates a mismatch for claimants whose conditions are episodic rather than permanent. A single payment provides no ongoing support, and there is no mechanism within the current product structure to intervene earlier in a person’s disability when support might prevent a claim from becoming permanent in the first place. Magill said there is a case for changing that, though she acknowledged the industry operates within legislative limits that APRA cannot unilaterally alter.
The third issue – stakeholder alignment – may be the hardest to shift. In group insurance, superannuation trustees hold the decision-making authority over product design, but Magill said changing TPD is not always their top priority. She noted that some trustees apply a narrow reading of the Best Financial Interests Duty (BFID) in ways that slow reform. In retail, advisers and research houses tend to favour established products, which creates inertia against newer designs even when those designs may be more durable over time.
APRA stopped short of directing the industry to make specific changes. Magill said the regulator does not plan to prescribe product definitions or use capital settings to force a particular outcome, contrasting the TPD situation with its earlier intervention in individual disability income insurance (IDII), where a clearer fix was available. Instead, APRA said it will continue sharing findings from its thematic work, help bring insurers and trustees into the same conversation, and engage with government on the legislative settings that the industry has identified as constraints.
The claims environment Magill described is reflected in figures published by CALI in July 2025. Insurers paid more than $2.2 billion in mental health claims in 2024, a figure that is approximately double what was paid five years earlier. Mental health conditions also drove one in five income protection claims, with payouts of $887 million in that year.
A thread running through Magill’s address was the specific responsibility of actuaries in this environment. Because actuaries sit across pricing, reserving, and product design, they are often the first inside an organisation to see where the numbers are going. Magill said that visibility carries an obligation. “From APRA’s perspective, your voice needs to be clear, disciplined, and heard at the right levels of your organisation,” she said.
Magill acknowledged that parts of the industry are already moving – engaging more actively with trustees and building the data case for why the status quo is not sustainable. She said actuaries have a role not just in the technical work, but in helping boards and other stakeholders understand what the long-run consequences of inaction look like. “A solution will not come from waiting for perfect conditions or pulling one lever. It will require disciplined risk management and coordinated action across claims, product design, and stakeholder alignment,” she said. The broader question APRA left on the table is whether TPD, in its current form, can remain viable for Australian consumers – and whether the industry will move quickly enough to find out before the answer is made for it.
