Regulator insurance roundtable reveals TPD challenges

Mike Taylor

Managing Editor and Publisher

25 May 2026

The outcome of a regulator-led roundtable of the major life insurers has pointed to the significant challenges with respect to total and permanent disability (TPD) insurance.

The roundtable, convened by both the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC), included representatives from all the major life insurers and reinsurers.

And the bottom line finding was that things need to change with respect to TPD, with the APRA synopsis being that “there was broad consensus that the challenges facing TPD insurance are significant and likely to persist without action”.

It said participants noted that TPD claims experience has deteriorated across both group and retail markets, driven in particular by the increasing incidence and complexity of mental health related claims.

“These challenges are reducing premium affordability for consumers and increasing financial volatility for insurers,” the synopsis said.

It said participants discussed what a future fit protection product for permanent disability and mental health could look like, including products that better reflect recovery pathways, episodic capacity and evolving patterns of work.

As well, it said participants highlighted legislative constraints are limiting the scope for product change, there are examples where some insurers are actively exploring and piloting new approaches within the current settings.

“APRA acknowledged potential benefits with legislative changes but emphasised that insurers should not delay taking actions in areas that are within their controls. ASIC agreed that insurers should take action in areas within their control, while also ensuring their products are designed with the needs of their intended target market in mind,” it said.

Dealing with TPD in the group insurance market, it said “participants highlighted the critical role of superannuation trustees in driving good member outcomes”.

“Structural shifts in claims patterns are often managed through premium increases and reduction in cover rather than more fundamental product redesign. This reflects trustees’ competing priorities and resources required to implement more complex product changes.”

“APRA and ASIC encouraged insurers to maintain proactive and constructive engagement with trustees and are open to facilitating joint insurer trustee effort to drive better outcomes for members.”

With respect to the retail market the synopsis said APRA and ASIC noted industry momentum towards introducing new TPD product designs.

“However, participants stated that the take up remains low, with existing products continuing to dominate the adviser led market. Questions were raised on whether existing products are appropriately priced to reflect the latest TPD risk profile. In this context, APRA emphasised the importance of robust reserving and pricing practices, so that assumptions keep pace with the latest claims experience and emerging risk trends,” it said.

“ASIC emphasised insurers must continue to handle claims in accordance with the relevant policy terms and their legislative obligations.”