APRA publishes Jane Magill's remarks to the 2026 All Actuaries Summit

TPD sustainability: a product made for one world tested in another

Key points

Good morning and thank you for the opportunity to be here today.

Life insurance rarely attracts much attention when it is working well. But for many Australians, it is a vital source of financial resilience when life does not go to plan.

Our environment, however, is changing rapidly - socially, medically and economically - and it is testing the limits of insurability, raising real questions about whether some products will remain available, accessible and affordable to Australians.

Importance of TPD sustainability

The current form of TPD insurance is being tested by a sharp rise in mental health claims. They now account for one in three claims paid, and mental health claims for people in their 30s have risen by more than 700 per cent over the past decade, based on CALI data.

This is not just an increase in volume. It’s a structural shift that the product’s original design was never intended to accommodate. Put simply, TPD is now being asked to solve an issue it was never built to address.

These are adaptive problems: moments when the world has changed, where the old settings no longer fit, and there is no textbook solution waiting on the shelf. Progress now requires more than technical skill. It calls for a change in perspective, creativity, agility and coordination across disciplines.

Voice of the actuary

That is why I am especially pleased to be speaking here today. In a challenge like this, actuaries play a critical role: in identifying pressure points and building sustainable solutions.

You are the voice of risk within your organisation, and you can often see these pressures building before they become obvious in reported results. Across product design, pricing and reserving, you bring a clear view of both the liability side of the balance sheet and the interests of policyholders. That puts you in a distinct position to balance commercial objectives with community interest.

From APRA’s perspective, your voice needs to be clear, disciplined and heard at the right levels of your organisation.

APRA has been actively engaged on TPD, working closely with insurers, ASIC and CALI. We have, for example, recently conducted a thematic review of insurance risk management practices and, together with ASIC, convened a CEO roundtable.

Let me highlight three learnings from this work, where adjustments could go a long way towards the sustainability of TPD:

1. Claims

First, claims. This function needs to keep pace with a changing social and medical environment:

• The claims functions need to be adequately resourced both in capacity and capability to better support claimants and their experience with the process.
• We are also seeing the need for new approaches in assessing more complex claims to ensure that assessments remain appropriate and valid claims are paid.

2. Product design

Second, product design. TPD was not built for today’s dominant claim drivers. At the CEO roundtable, several themes were consistently raised:

• The label of TPD and lump sum benefits do not always deliver good outcomes for individuals, particularly for claimants with episodic conditions.
• And, that there is a strong case for earlier intervention in a person’s disability journey, to provide support sooner and improve long-term outcomes.

APRA recognises that there are genuine constraints around product design. The industry has highlighted legislative restrictions where APRA does not hold the levers. We cannot change those settings, but we can help facilitate dialogue with government where needed.

We also recognise that change toward sustainable product design does not happen in isolation. It requires support from distribution partners.

3. Stakeholder alignment

And third, I would like to highlight stakeholder alignment. Superannuation funds, in particular, play a critical role in addressing the sustainability challenge.

• In group insurance, trustees ultimately own the product design and making changes may not always be their top priority. In some cases, a narrow interpretation of BFID (Best Financial Interests Duty) can hinder action.
• In retail, advisers and research houses also have significant influence, and existing products can often be favoured over newer, more sustainable designs.

Progress ahead

While I have just highlighted three significant challenges, APRA is also seeing progress. Some insurers are adapting their approaches and innovating where they can;

• APRA has observed significant effort across the industry to engage with trustees and advisers.
• Insurers are also making greater use of data and forward-looking modelling to demonstrate the sustainability challenge, and to show what future outcomes may look like if current settings do not change. 

This progress is important and it needs to continue. And actuaries play a key role. Not only in pricing and reserving, but in helping stakeholders understand the long-term implications of product design and the trade-offs involved.

APRA’s support

There is currently no industry consensus on what a sustainable TPD product should look like, although APRA is seeing some insurers actively pursuing innovation. We have been asked whether APRA will intervene, including through measures such as prescribing product definitions or applying capital adjustments. We do not intend to do so at this stage. Unlike IDII, this is a more complex challenge and does not have a single, straightforward solution. 

APRA will continue to support the industry’s effort to innovate and address sustainability in several ways:

1. Firstly, we will continue diagnosing the issues through thematic reviews and share insights and better practices.
2. Secondly, we can help bring all relevant parties to the table. We are working closely with CALI and we can support and facilitate engagement between insurers and trustees to address sustainability and achieve good member outcomes.
3. And thirdly, while we do not control legislative settings, we recognise that they are an important part of the overall issue. We will continue to engage alongside industry in discussions with government and other agencies on where there may be constraints and where change may be needed.

A complex challenge

This is a complex challenge, but the message is simple: when the world changes, products must adapt.

The question now is whether the industry can act swiftly and reset before sustainability erodes further.

And a solution will not come from waiting for perfect conditions or pulling one lever. It will require disciplined risk management and coordinated action across claims, product design and stakeholder alignment.

That is where the actuary’s voice matters most: in identifying pressure points, testing assumptions and helping insurers make sustainable decisions early.

And if the industry gets this right, it will do more than just address today’s TPD pressures. It will help preserve trust in protection products and keep them available and accessible for Australians who rely on them.