The two proposed national insurance injury and disability schemes recommended by the Productivity Commission are likely to affect total and permanent disability (TPD) insurance offerings in the future.
Last month, the Productivity Commission has released its draft report recommending the creation of the National Disability Insurance Scheme for most disabilities, and the National Injury Insurance Scheme to support people with severe injuries following major accidents.
Speaking at the Financial Services Council’s Life Insurance Conference, the associate commissioner of the Productivity Commission and a partner at PricewaterhouseCoopers, John Walsh, said the schemes would have more impact on health rather than life insurance. However, he said the life insurance industry would not be unaffected.
“The one product that may be affected is TPD cover. I’d be interested to know how much money has been paid out from TPD in recent years,” Walsh said.
Without getting into specifics as to how the products might change upon the implementation of the two schemes, Walsh added that TPD insurance products, particularly offered through group life coverage, would be most likely impacted.
“But, I think that people who are going to take that coverage, and mostly it’s through superannuation, would’ve expected that this sort of scheme was available anyway,” Walsh said.
The productivity commission concluded that the current disability system was “poor, underfunded, fragmented and unsustainable”.
If accepted by the Federal, State and Territory governments, the reforms would be implemented in 2014-2015.
