Inside the rise of mental health TPD claims

On 23 July, TAL hosted a Partner Roundtable in our Sydney and Melbourne offices with a number of fund stakeholders to explore the evolving member claims experience and the growing sustainability challenges surrounding Total and Permanent Disablement (TPD) insurance. The discussions uncovered a range of insights relating to the increasing complexity of mental health claims.  

Understanding these issues is critical to shaping how we respond as an industry and continue to support members in fair and meaningful ways.

Navigating the growing strain on sustainability

Claims for psychological injury and illness are increasing well beyond membership growth, and the complexity of assessing them is reshaping how we approach product design. 

TPD was originally designed to protect members experiencing permanent disability from physical injury or illness. Over time, it has evolved to play a vital role in supporting members with long-term mental health conditions such as depression and PTSD, reflecting broader changes in our workforce and society. While this evolution demonstrates the important role group insurance plays in supporting vulnerable members, it also means the product is now carrying a growing share of complex psychological claims. 

These sustainability challenges have also been acknowledged by APRA, which recently voiced concerns about the long-term sustainability of TPD insurance at July’s Conexus Insurance in Super Summit. 

This shift is prompting important conversations across the industry about how we can continue to provide fair, affordable and sustainable cover for members, ensuring they receive support when they need it most, while safeguarding the long-term viability of the product. 

Mental health claims rising—and taking longer 

Over the past three years, mental health-related TPD total group insurance claims have grown by 60%, compared to around 20% growth among other claim causes.¹ Yet insured membership has only grown by 2–3% annually, highlighting a disconnect between growth in cover and claims experience.²

“Every claim is unique,” said Daniel Sayegh, TAL’s General Manager, Claims Risk & Governance. “As part of TAL's claims assessment process, we liaise with treating psychologists, psychiatrists, GPs, rehabilitation providers, employers and legal representatives who are all trying to support the member with the appropriate treatment plan and determine the member’s ability to return back to the workplace.” 

Compounding the complexity is the difference between medical and occupational definitions of disability. Medical definitions often don’t account for episodic or situational mental health conditions, while traditional occupational criteria are often based on older work models and may not fully reflect today’s realities, like transferable skills, flexible work locations and technologies that help people continue working despite impairments. 

The duration of mental health claims is also attracting public scrutiny. The complexity of these TPD claims often contributes to longer processing times, with notifications typically coming six months later than other claims and assessments taking around two weeks longer to complete.  

Without visibility into these complexities, expectations around how long a claim should take can become unrealistic. It’s also important to recognise the role of claims consultants, who navigate these challenging circumstances with both compassion and rigour.

What's driving the surge?

There is no single cause for the rise in mental health-related TPD claims. Instead, it reflects a combination of societal, policy and system-level shifts, including: 

• a greater awareness of insurance in super  
• cost-of-living stress, with 73% of those in debt report experiencing anxiety³
• tighter eligibility within workers’ compensation schemes across most states 
• a sustained level of legal involvement, with over 50% of TPD claims now supported by legal representatives
• greater awareness and understanding of mental health conditions within the broader community, supported by evolving social attitudes and workplace cultures.⁴

Together, these factors create the conditions for higher volumes and longer durations, placing pressure on both product pricing, claims resources and member expectations. 

“Mental health claims don’t follow a straight line; it’s not like a broken leg or a cancer diagnosis,” Daniel said. “There’s variability in treatment, relapse and recovery, all of which makes assessing ‘permanency’ more complex.”

Who is most impacted?

Our portfolio insights show clear trends: 

• Younger members (aged 25–45) are driving much of the increase. 
• There are faster increases among women than men.
• There is slightly higher growth among blue-collar workers than white-collar workers. (ASIC 2024) 

While these trends highlight groups driving the increase, it’s important to note they are growing from relatively lower bases. 

We also see differences when looking at location and socio-economic factors: 

• Regional LGAs make up 35% of claims, but only 25% of membership.
• Lower socio-economic groups represent 42% of mental health claims, despite accounting for only 27% of insured lives.⁵

“These insights speak to both need and risk,” said Michael Lin, TAL’s Head of Product and Pricing. “Group insurance is doing what it’s meant to—supporting vulnerable members. But the scale and shape of these claims is testing the system in ways it wasn’t designed for.”

Where to from here?  

We believe strongly in the critical role TPD plays within the group insurance safety net. Last year, TAL paid $2.88 billion to 37,655 members, with over one-third of that amount related to TPD claims.⁶

Michael highlighted the key challenge facing all funds: “How do we better support working Australians in need, while maintaining a fair and sustainable insurance system?” 

TAL’s General Manager of Group Partnerships, Dan Taylor said: “Looking ahead, we’re committed to enhancing the support we provide members at claim time to address the growing prevalence of mental health conditions. Simultaneously, we’re working closely with our partners and the broader industry to evolve product design, preserving and strengthening TPD’s vital role in the insurance system.” 

“We recognise that every fund is unique, and we’re committed to working with you to understand how these trends are impacting your members and what we can do, together, to navigate them,” said Dan. 

¹ Growth rate is based on a comparison between total claims TAL received in 2021 and 2024.

² APRA. Life insurance claims and disputes statistics, 2024. 

³ Super Consumers Australia. Survey Findings, May 2024.

⁴ ASIC. 5 million+ Australians Have Struggled to Make Loan and Debt Repayments, Yet Many Not Asking for Help – Key research findings relating to financial hardship in Australia, 2024.

⁵ CALI and KPMG. Australia’s Mental Health Check Up: Retail Industry Mental Health Claims Research, 2024. TAL Life Insurance contributed to the research.

⁶ TAL Life Insurance Services Limited ABN 31 003 149 157 (TLISL) paid claims on group life insurance policies issued to superannuation fund trustees during the period 1 July 2024 to 30 June 2025. The paid figure represents gross benefit amounts.

To discuss what these insights mean for your fund and your members, contact your Partnership Manager.