APRA and ASIC Highlight Urgent Need for TPD Insurance Reform

The roundtable, held on 15 April 2026, brought together senior executives from 19 insurers and reinsurers, alongside representatives from Treasury and the Council of Australian Life Insurers (CALI). The consensus among participants was that the challenges facing TPD insurance are significant and likely to persist unless substantial changes are implemented.

A primary concern raised during the meeting was the deteriorating claims experience across both retail and group TPD markets. This decline is largely driven by the increasing incidence and complexity of mental health-related claims, which have contributed to affordability pressures for consumers and financial volatility for insurers. The rise in mental health claims underscores the evolving nature of disability and the need for insurance products to adapt accordingly.

Discussions at the roundtable focused on the necessity of product redesign. Participants examined whether traditional TPD definitions and benefit structures remain suitable in an evolving workforce environment. The consensus was that existing models may no longer adequately address the needs of policyholders, particularly in light of the growing prevalence of mental health issues.

APRA and ASIC have encouraged insurers to maintain proactive and constructive engagement with trustees and indicated their openness to facilitating joint insurer-trustee efforts aimed at improving outcomes for members. This collaborative approach is seen as essential for developing sustainable solutions that balance the needs of consumers with the financial stability of insurers.

For Australian consumers, these developments signal potential changes in TPD insurance offerings. It's crucial for policyholders to stay informed about how these reforms may impact their coverage and to engage with their insurers or financial advisers to understand any forthcoming changes. As the industry works towards more sustainable and responsive insurance products, consumers should ensure that their policies continue to meet their personal and financial needs.