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Regulators Call for Action on TPD Insurance Amid Rising Mental Health Claims

APRA and ASIC Emphasise Need for Product Reforms to Sustain TPD Insurance

Regulators Call for Action on TPD Insurance Amid Rising Mental Health Claims?w=400

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In a recent joint CEO roundtable held on 15 April 2026, the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) convened with senior representatives from 19 life insurers and reinsurers to discuss the escalating pressures on Total and Permanent Disability (TPD) insurance products.
The primary concern addressed was the significant increase in mental health-related claims, which are becoming more frequent and complex, thereby impacting both the affordability and sustainability of TPD insurance.

TPD insurance is designed to provide financial support to individuals who experience permanent disability, including those arising from mental health conditions. However, the surge in such claims has led to higher premiums for consumers and financial volatility for insurers. APRA and ASIC have expressed that these challenges are substantial and are likely to persist without proactive measures from the industry.

During the roundtable, discussions centred on whether current TPD products accurately reflect modern work patterns, recovery processes, and the management of long-term health conditions. There was a consensus on the necessity for products that better accommodate recovery pathways, episodic capacity, and evolving work patterns. Some insurers are already exploring new approaches within the existing regulatory framework, although legislative constraints continue to limit broader product redesigns.

APRA acknowledged that while legislative changes could facilitate improvements, insurers should not delay in implementing changes within their control. The regulators urged the industry to take immediate action to address these issues, emphasising that waiting for broader legislative reforms is not advisable.

For consumers, this development underscores the importance of staying informed about the evolving landscape of TPD insurance. Policyholders should review their coverage to ensure it aligns with their needs, especially in light of the increasing prevalence of mental health-related claims. Consulting with financial advisers can provide clarity and assist in making informed decisions regarding TPD insurance options.

In summary, the joint initiative by APRA and ASIC highlights the critical need for the life insurance industry to adapt to the rising incidence of mental health claims. By proactively reforming TPD insurance products, insurers can enhance their sustainability and continue to provide essential support to Australians facing total and permanent disabilities.

Published:Tuesday, 26th May 2026
Author: Paige Estritori

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

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