Swiss Re highlighted several factors contributing to this move, including the evolving nature of work, increasing claim costs, and changing societal expectations. Notably, mental health-related TPD payouts have nearly doubled over five years, reaching over $2.2 billion in the previous year. This surge has placed significant strain on Australia's financial system.
Paul Murray, CEO of Life and Health Reinsurance at Swiss Re, emphasised the need for a balanced approach: "The shared goal across the industry is to preserve the social value of TPD – protecting Australians when they need it most – while creating a model that can endure economic cycles and demographic shifts." He stressed the importance of balancing protection with long-term sustainability to prevent rising premiums that could make insurance unaffordable.
Swiss Re's decision underscores the necessity for the insurance industry to adapt TPD products to ensure they remain viable and continue to provide essential support to Australians. This development is particularly relevant for individuals aged 25 to 60, including full-time and part-time employees, self-employed professionals, tradespeople, freelancers, and gig workers, who rely on such coverage for financial security.
For those considering or currently holding TPD insurance, it's crucial to stay informed about industry changes and to consult with financial advisors to ensure their coverage aligns with their needs and the evolving market landscape.
