Mental health claims paid by Australian life insurers more than doubled over five years to exceed $2.2 billion in 2024 – and new consumer research from Bupa and the Centre for Economics and Business Research (Cebr) now links a material share of that trajectory to a trigger the industry has largely left unaddressed: major life events.
The Bupa-Cebr study, published July 22, 2026, examined how personal milestones – returning to work after becoming a parent, losing a loved one, caring for a relative, divorce, and marriage – affect absenteeism and workplace productivity across multiple national markets. For Australia, the modelling put the annual cost at $10.7 billion in lost output and 18.5 million working days. Globally, the figure reached $636 billion in lost productivity and 1.7 billion working days per year.
Australian respondents who managed their mental health proactively – through conversations with friends and family, professional support, or healthcare consultations – took an average of two fewer days off work each year. Around 70% said they wished they had sought support earlier. Globally, those who had experienced one or more major life events reported emotional overwhelm (69%), reduced concentration and difficulty focusing (53%), and lower confidence (52%) – presenteeism indicators with direct implications for group insurance claims frequency and duration.
Liam Daly, senior economist at Cebr, said the study was designed to assign a concrete economic value to that disruption. “Life’s biggest moments, the joyful ones and the difficult ones alike, rarely stay confined to our personal lives. They follow us into work too, often in ways that are easy to underestimate,” he said. The report estimated that earlier intervention could recover 403,000 working days and save the economy $219 million annually.
According to the Council of Australian Life Insurers (CALI), mental health is now the leading cause of total and permanent disability (TPD) claims, making up almost one in three claims paid. In 2024, insurers paid more than $2.2 billion in mental health claims – almost double the amount paid five years earlier – while mental ill health drove one in five income protection claims, with payouts totalling $887 million. The age profile is a compounding concern for long-tail reserving. CALI data cited by the Australian Prudential Regulation Authority (APRA) shows that mental health TPD claims among people in their 30s have risen by more than 700% over the past decade – a structural shift the product’s original design was never intended to accommodate. Workers’ compensation data from Safe Work Australia confirms the same trend at the employer level. Mental health conditions now account for 12% of all serious workers’ compensation claims in Australia – up 14.7% from the prior year – and the median time lost for mental health claims is almost five times longer than for other injuries and diseases.
APRA has told the actuarial profession that TPD insurance faces a sustainability problem it cannot solve through technical adjustments alone, identifying mental health as a claim type the product was never structured to handle at scale. At the 2026 All Actuaries Summit, APRA executive director Jane Magill outlined three interlocking failures: claims management, product design, and alignment between the parties that control the product.
Industry leaders have reached the same conclusion. Damien Mu, managing director and CEO of AIA Australia, said the sector has reached an inflection point on product design. “If we could get that early intervention right, we’d all be much more successful. It’s got to be more about the services and not waiting until it’s a claim,” Mu said at an Investment Magazine roundtable in March 2026. Aware Super CEO Deanne Stewart was more direct about the structural problem. “The way that the system is constructed is possibly good for 30 years ago, but it doesn’t match work today. Insurance inside super, particularly as it relates to TPD, just needs a fundamental overhaul,” she said at the same roundtable. KPMG’s Life Insurance Insights report, covering results to June 30, 2025, noted the ratio of claims to premium in group lump sum risk moved from 78% in 2023 to 81% in 2024 and 91% in 2025 – a deterioration that validates the urgency of both the regulatory and commercial response.
Despite the scale of the problem, the employer-level infrastructure designed to address mental health before it becomes a claim is significantly underutilised. While 80% of Australia’s top 500 companies now offer EAP services, the average EAP utilisation rate across Australian workplaces sits at approximately 5%, meaning the vast majority of employees with access to support are not using it. The Bupa-Cebr finding that proactive individuals take two fewer sick days per year is modest at the individual level, but scaled across 18.5 million lost working days annually, it points to a claims exposure concentrated precisely in the gap between available support and actual uptake – the same gap Mu identified.
The regulatory environment is also increasing employers’ obligations to manage psychosocial risks. By December 1, 2025, every Australian jurisdiction had enforceable work health and safety duties requiring employers to identify, assess, and control psychosocial risks in the workplace. In New South Wales, the Workers Compensation Legislation Amendment Act 2025 tightened eligibility for certain ongoing workers’ compensation benefits relating to psychological injuries, while Victoria’s Occupational Health and Safety (Psychological Health) Regulations came into effect on the same date. Together, these reforms are expected to influence workers’ compensation claims experience and employers’ management of psychosocial risk, with potential implications for the pricing and design of group insurance products over time.
Guneet Sawhney, managing director of Bupa Healthcare Services, framed the research as a call to act earlier in the life cycle of risk. “We often spend a lot of time preparing financially and practically for life’s biggest moments but give far less thought to the impact they can have on our mental health,” Sawhney said. For insurers, the data makes the commercial logic plain: the cost of the claim is already quantified. The cost of the intervention – at two fewer sick days per proactive person – is considerably smaller.
