Life insurers are keeping an eye on their total and permanent disability (TPD) products to ensure it does not become a sustainability issue like income protection has.
TAL chief executive, Brett Clark, said there were sustainability issues that needed to be addressed in group TPD and that it was the next job for the life insurance industry to look at.
“It’s a similar situation like income protection – we can’t have higher prices, chasing higher claims experience. That's not good for anyone and not good for members of superannuation funds. So, we need to we need to think about this as well,” he said.
Clark noted TAL would move to address sustainability issues in its TPD products in 2022.
MLC’s general manager for retail distribution, Michael Downey, noted the Australian Prudential Regulation Authority (ARPA) called out that it would look to review TPD.
“I think they're concerned about possible over insurance of TPD and that a lot of mental health claims are being paid out under TPD as well,” Downey said.
“It’s an area for all of us [insurers] to note there and just watch the TPD portfolio that we're all running at the moment and to stay close to that and make sure it doesn't become the next income protection.”
Downey said MLC currently did not have any plans to change its TPD products but were monitoring that area of the business.
He said there could be subtle changes in the future on definition and the maximum amount of coverage.
“Let's see how that there might be some subtle nuances over time or maybe how do we bring TPD and income protection together. Maybe that's how the product start to evolve over the next couple of years,” he said.
“…But it’s not at where income protection was a few years ago and we were slow to react. It’s just on watch at the moment.”