Australia’s disability insurance sector faces a growing mismatch between how its products are structured and the realities of mental health claims – a tension that Zurich Financial Services Australia put at the centre of its fourth bi-annual Mental Health Roundtable, held this month in Sydney. The forum drew clinical practitioners and civil society organizations to examine what changes to product design could look like as mental health conditions account for an increasing share of life insurance claims.
Zurich chief executive officer Justin Delaney said life insurance sits behind only government as a financial safety net for Australians with mental health conditions, and that the system is showing signs of stress. “Our data shows that prevalence is rising, which is putting significant pressure on individuals and their quality of life, informal and formal support networks, and the broader economy. Disability insurance products are an important part of this financial safety net, however, the suitability of these products for people with mental health conditions has become increasingly challenging,” Delaney said.
Zurich’s roundtable included new company analysis on the trajectory of mental health conditions across six countries, including Australia, through 2030. The data points to a sustained upward trend that is already registering across multiple parts of the income support system – not only in life insurance. Separately, a May 2026 report commissioned by the Council of Australian Life Insurers (CALI) and researched by SuperFriend mapped 11 income support systems in Australia – from employer sick leave and workers compensation through to early superannuation withdrawals – and found that the volume of people drawing on those systems has grown materially over the past decade.
Two million more Australians are now claiming income support payments than 10 years ago, with mental health conditions the dominant factor driving that growth. In the past year alone, 8.5 million people accessed some form of income support, with total payments reaching $78.9 billion. Life insurance enters that picture at a late stage. By the time a claimant reaches a life insurer, they have typically already drawn on other parts of the system, making those claims more involved and longer to resolve. Mental ill-health accounts for approximately one in three TPD claims and one in five income protection claims. In 2023-24, life insurers paid out $8.3 billion in income protection and TPD benefits to around 55,000 people who could not work – about 11% of all income support paid nationally that year. “By the time someone turns to life insurance, they have often moved through other parts of the ecosystem. These claims tend to be more complex and longer in duration,” CALI chief executive officer Christine Cupitt said.
The core of the May 2026 discussion centred on how disability insurance products could be redesigned to better serve people with mental health conditions. Participants examined where current product structures create barriers or produce outcomes that work against recovery and explored how any redesign would need to account for its effects on the broader support network a claimant relies on. Delaney said that working across sectors is a prerequisite for getting that redesign right. “As we seek to innovate these products, we recognise the importance of doing so collaboratively. Our recent roundtable was a great opportunity to collectively explore product re-design possibilities and understand how any proposed changes could integrate with, or impact, other parts of the mental health ecosystem,” Delaney said.
Michael Marthick, director of insurance at Spectrum.Life ANZ, said the reach of disability insurance into the lives of claimants creates an opening for more than financial support. “Used well, that’s a platform for genuine support – not just financial protection. Roundtables like this are how we move from good intentions to practical reform,” Marthick said. Jennifer Keyes, head of product innovation and mental fitness impact at Gotcha4Life, said that bringing multiple perspectives into product decisions is what keeps the needs of claimants from being lost in the process. “Those decisions are informed by expertise and perspectives from across the mental health ecosystem,” Keyes said. Catherine Day, advisor at It Pays to Care, said the session created space for participants to question current approaches and consider alternatives.
Zurich outlined three changes it has made to its mental health claims approach since its previous roundtable six months ago. The insurer has introduced a social support rehabilitation program for claimants who are vulnerable or have a mental health condition, begun a pilot with a mental health telemedicine provider to cut wait times for claimants who need a psychiatric opinion, and committed to a pilot focused on chronic pain management that treats mental health as a factor in how pain presents and persists.
Outside the product design question, both Zurich’s roundtable and the CALI-SuperFriend research point to a broader structural issue: the 11 income support systems that Australians can draw on operate largely independently of one another, and claimants with mental health conditions often bear the cost of that disconnection. “The surge in mental health claims is testing the income support safety net’s ability to cope because it wasn’t built with mental health in mind. No single part of the safety net can tackle this challenge alone. We need a connected and coordinated approach, led by the Federal Government, to respond to the productivity challenge of mental ill-health in our community,” Cupitt said. The fourth Zurich Mental Health Roundtable was attended by representatives from the Royal Australian and New Zealand College of Psychiatrists, Lifeline Australia, SANE Australia, Gotcha4Life, This Way Up, Bupa, Spectrum.Life, and It Pays to Care.
