The Council of Australian Life Insurers indicates that the sector is being “stretched to its limits” as there has been a significant increase in individuals exiting the workforce due to mental health issues.
It reports that mental health conditions have emerged as the top reason for total and permanent disability claims, representing almost one-third of all payouts.
Last year, life insurers disbursed $2.2 billion for retail claims related to mental health, which is nearly twice the figure from 2020, with over $884 million associated with income protection.
Christine Cupitt, the CEO of the Council, expresses that the “whole safety net, not just life insurance, is facing challenges.”
“Every year, we observe an increasing trend of individuals, especially younger Australians, permanently leaving their jobs because of mental health issues.”
Ms. Cupitt points out that the number of total and permanent disability claims among Australians in their 30s has seen a staggering 732% increase over the last ten years.
“Individuals are finding themselves in a position where they have no option but to classify themselves as totally and permanently disabled, despite medical evidence suggesting they might be able to return to work.”
“This situation is a mismatch and provides clear proof that more efforts are needed to foster a community that is mentally healthier.”
“Insurers are committed to supporting Australians most significantly impacted by mental health challenges, but we need to rethink how to better assist our clients in the coming years.”
