APRA acknowledges TPD settings unfit for purpose

Mike Taylor

Managing Editor and Publisher

28 May 2026

The Australian Prudential Regulation Authority (APRA) has sent a clear message to the Government that legislative change is needed to help fix the Total and Permanent Disablement (TPD) insurance settings which are becoming increasingly unfit for purpose.

The message has been delivered by APRA senior executive, Jane Magill who acknowledged life insurer concerns that legislative restrictions are constraining the degree to which they can redesign TPD products.

“APRA recognises that there are genuine constraints around product design. The industry has highlighted legislative restrictions where APRA does not hold the levers. We cannot change those settings, but we can help facilitate dialogue with government where needed,” Magill told an actuaries summit.

“We also recognise that change toward sustainable product design does not happen in isolation. It requires support from distribution partners.”

Magill’s address to the actuaries summit came just days after APRA published a synopsis of a roundtable with the insurers aimed at identifying and addressing the TPD problems.

It also made clear that superannuation funds needed to be brought on board as the major stakeholders with respect to group insurance and the delivery of TPD.

Importantly, she made clear that there was unlikely to be APRA intervention similar to that which occurred with respect to Individual Disability Income Insurance (IDII).

Her address kicked off on the note that “the current form of TPD insurance is being tested by a sharp rise in mental health claims. They now account for one in three claims paid, and mental health claims for people in their 30s have risen by more than 700 per cent over the past decade, based on CALI data”.

“This is not just an increase in volume. It’s a structural shift that the product’s original design was never intended to accommodate. Put simply, TPD is now being asked to solve an issue it was never built to address.

“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.

Magill said pointed to product design as being a significant problem stating that “TPD was not built for today’s dominant claims drivers” and pointed to the messages received from the insurer CEO roundtable:

• The label of TPD and lump sum benefits do not always deliver good outcomes for individuals, particularly for claimants with episodic conditions.
• And, that there is a strong case for earlier intervention in a person’s disability journey, to provide support sooner and improve long-term outcomes.

Magill stressed the importance of superannuation funds being part of the necessary changes, pointing out that:

• In group insurance, trustees ultimately own the product design and making changes may not always be their top priority. In some cases, a narrow interpretation of BFID (Best Financial Interests Duty) can hinder action.
• In retail, advisers and research houses also have significant influence, and existing products can often be favoured over newer, more sustainable designs.