AIA Australia paid more than $2.4 billion across 34,000 claims in 2025. Mental health was the dominant driver across both income protection and total and permanent disability. For advisers managing clients who are already asking why their cover costs more, understanding what is behind those figures is now a prerequisite for the renewal conversation.
The premium increases reaching clients are a direct consequence of a structural deterioration in group claims experience, not a pricing decision made in isolation. AustralianSuper announced increases effective May 30, 2026, with TPD cover rising by an average of 40%, death cover by 20%, and income protection by up to 38%.
The market-wide data explains why. KPMG's Life Insurance Insights report shows the ratio of claims to premium in group lump sum risk rose from 78% in 2023 to 81% in 2024, reaching 91% by June 30, 2025 - a deterioration that produced a negative insurance service result for group lump sum risk across the industry. A claims ratio approaching 100% before operating costs means the traditional lump sum TPD product is structurally loss-making at current pricing.
Mental health accounted for 28.8% of Group TPD claims lodged at AIA in 2025, up from 27.4% in 2024 and 20.4% in 2020. That trajectory is consistent with what the Council of Australian Life Insurers has reported across the market: more than $2.2 billion in mental health claims paid in 2024, almost double the figure from five years earlier, with mental health accounting for one in three TPD claims and 732% growth in claims among Australians in their 30s over the past decade.
Within AIA's book, the claimant profile gives advisers useful demographic context. Retail IP claimants averaged 47 years at the time of claim for both males and females, with TPD exits concentrating around the early 50s. For advisers placing group IP or reviewing default TPD coverage for specific workforce segments - particularly those with younger professional cohorts or higher rates of stress-related conditions - that age-concentration data is underwriting-relevant. The most acute deterioration is occurring well before traditional retirement age.
For female Group IP claimants, mental illness was the leading cause. For males, accidents led with mental illness close behind. Musculoskeletal conditions were a consistent secondary driver across both genders.
AIA's 2025 Impact Report includes a comparison between Vitality and non-Vitality customers on mental health IP claims drawn from AIA's own book over 2021 to 2025. AIA Vitality is a behavioural health and wellbeing programme available to AIA policyholders, designed to incentivise healthy habits through physical activity tracking, health assessments, and mental health tools.
Among customers who lodged mental health-related retail IP claims, AIA Vitality members achieved a 71% successful return-to-work rate against 29% for non-Vitality customers. Vitality members returned to work within six months at a rate of 42%, against 15% for non-members. Their average claim duration was three months shorter at 11 months against 14 months for non-members.
The return-to-work differential is relevant for advisers discussing integrated wellbeing cover with clients who have younger workforces, higher knowledge-worker concentrations, or documented mental health exposure in their existing claims experience. A product that meaningfully shifts the return-to-work rate on the industry's fastest-growing claim type carries a different long-term cost profile from one that does not - and that difference is increasingly visible in carrier data.
AIA's report signals active product development, moving toward positioning TPD as protection against severe and permanent loss of work capacity, and IP as the primary cover for conditions with recovery variability. That distinction matters for the mental health claims profile specifically: episodic conditions do not always produce a clean boundary between temporary disability and permanent incapacity, and the lump sum TPD structure has historically been poorly suited to managing that ambiguity.
APRA executive director Jane Magill, speaking at the 2026 All Actuaries Summit, described TPD as "now being asked to solve an issue it was never built to address." She has indicated that the regulator expects insurers to pursue innovation, with distribution partners having a role in supporting that shift.
For advisers, the practical implication runs in two directions. Retail claims paid by AIA reached $873 million in 2025, up from $815 million the prior year. IP payments rose to $308 million from $282 million, and Group IP claims rose to $555 million from $516 million. Rising claims volumes, deteriorating group loss ratios, and regulatory pressure on product redesign are converging.
Advisers who can explain that connection to clients - why the AIA data produces the premium increases clients are seeing, what the product design shift means for future cover structures, and where integrated wellbeing features change the risk profile - are better placed for the renewal conversations ahead than those managing premium shock without context.
