According to APRA’s executive director life and private health insurance and superannuation, Jane Magill, the limits of TPD insurance are being tested by social, medical and economic changes – including a rapid rise in mental health claims.
Claims related to mental health, Magill said, now account for a third of claims paid. And over the past 10 years, mental health claims have risen by more than 700% among people in their 30s.
“These are adaptive problems: moments when the world has changed, where the old settings no longer fit, and there is no textbook solution waiting on the shelf. Progress now requires more than technical skill. It calls for a change in perspective, creativity, agility and coordination across disciplines,” Magill said.
To address these issues, Magill said APRA has put forward three potential adjustments to TPD insurance:
- Claims functions need to be adequately resourced to better support claimants
- Product design needs to be accommodate “today’s dominant claim drivers,” which include episodic conditions for which lump sum benefits might not be suitable
- Stakeholders, including super trustees and advisers, need to be more aligned on these priorities
“While I have just highlighted three significant challenges, APRA is also seeing progress,” Magill said.
She continued: “There is currently no industry consensus on what a sustainable TPD product should look like, although APRA is seeing some insurers actively pursuing innovation.”
“We have been asked whether APRA will intervene, including through measures such as prescribing product definitions or applying capital adjustments. We do not intend to do so at this stage. Unlike IDII, this is a more complex challenge and does not have a single, straightforward solution.”
I am disheartened and jaded after having insurance all my life and recommending it to clients only to find level premiums prohibitively expensive and cancelled at the time that it was supposed to assure us most (in our 50s).
Those that have never held insurance seem to do just fine with government support and go fund me pages.
Save your premium dollars and use them to support friends and family in their time of need and have blind faith that others will do the same for you.
Ponzi schemes usually involve the instigator making money – so if TPD is one, it’s the worst one ever as the instigators are absolutely not making money from it.
I agree though it is disheartening for customers to see all these premium increases, which are a direct response to spiralling claims cost beyond what anyone envisaged. Maybe short-sighted, but we can’t turn the clock back sadly. TPD in its current form will not survive, that is absolutely clear. What’s important now is that all market participants have a voice in what comes next and then get behind the solution – that is how the policyholders of tomorrow will get better outcomes than you have.