Data collected by the Financial Services Council and KPMG Australia has found that mental health conditions account for almost a quarter of all Total and Permanent Disablement (TPD) insurance claims paid.
In 2018 according to APRA over $4.4 billion was paid out by life insurers in TPD claims to 26,150 Australians who were not expected to be able to work ever again.
While accidents and back injuries have long been known to be major reasons for TPD claims, the FSC/KPMG data found that claims paid due to mental health conditions exceeded claims from other causes.
Top 5 Causes of TPD Claims
|Rank||Cause of TPD Claim||% Total Claims Paid|
|1||Mental Health Conditions||24.1|
|4||Nervous System Disorders||13.9|
Sally Loane, FSC CEO, said that the analysis of the 2018 TPD claims data “for the first time, shows the extent of TPD claims for mental health conditions.”
The data also indicated that mental health claims tended to take longer to be reported and assessed than other causes of claims. However, on the positive side, the 91% average payout rate by insurers for mental health claims was higher than the average payout rate of 88% for all TPD claims.
Further in depth analysis of a portion of the TPD claims data provided a breakdown of the types of mental health conditions behind the claims:
|% TPD Claims||Type of Mental Health Condition|
|22.9||Reaction to severe stress (e.g. PTSD)|
|16.8||Depressive episodes (lowering of mood, reduction of energy/activity)|
|13.2||Recurrent depressive disorders (repeated depressive episodes)|
|10.3||Other anxiety disorders (e.g. panic)|
|6.8||Bipolar affective disorder|
|0.9||Use of alcohol|
“TPD claims are significantly more complex to assess than other life insurance claims because they usually require a judgment as to whether or not the person is expected to work ever again” said Ms Loane.
The FSC and KPMG will continue to gather and analyze data on a six-monthly basis to help life insurers to develop policies and services to deal with mental health issues.
More Claims info
In July 2019 insurance company AIA released a public statement indicating that mental illness was now the largest cause of TPD claims for AIA policyholders aged under 25. AIA also confirmed it was seeing a rising trend in the number of claims for mental illness, with white collar and professionals twice as likely to claim for this reason than blue collar or other manual occupations.