AIA Australia Highlights Industry Challenges Amid Rising Mental Health Claims
AIA Australia Highlights Industry Challenges Amid Rising Mental Health Claims
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AIA Australia CEO Damien Mu has raised concerns about the life and health insurance industries facing structural changes driven by increasing mental health claims, rising premiums, and economic volatility.
Speaking during the company's online Thrive for Life presentation, Mu emphasized the unsustainability of current life insurance models under these pressures.
He noted that most households could afford only two mortgage repayments if they lost their income, while premiums and everyday expenses continue to rise. Additionally, mental health claims have doubled since 2014, with around 70% of claims this year coming from white-collar workers. Factors such as COVID-19, hybrid work, and digital disruption have contributed to this trend.
To address these challenges, AIA Australia is focusing on sustainable pricing and severity-based product design, moving away from comprehensive, high-cost Total and Permanent Disability (TPD) cover. The company's TPD Assist model, which supports clients' gradual return to work, has delivered strong outcomes and will inform future product refinements.
Mu urged advisers to reassess product selection through a long-term affordability lens, emphasizing that sustainability matters more to clients who need to maintain protection over time. He also called for industry, regulators, and advisers to collaborate in modernizing best-interest duties and supporting the transition to more sustainable life insurance structures.
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Liability Insurance: Insurance that provides protection from claims arising from injuries or damage to other people or property
