Australia's life insurers are warning that the nation's financial safety net is being pushed to its limits, with more Australians leaving work permanently due to mental ill health than ever before.
New data from the Council of Australian Life Insurers (CALI) reveals that mental health is now the leading cause of total and permanent disability (TPD) claims, making up almost one in three claims paid.
In 2024, insurers paid out more than A$2.2bn ($1.4bn) in retail mental health claims, almost double the amount paid five years ago. Mental ill health is also driving one in five income protection claims, with payouts totalling A$887m in 2024 alone.
“Australia is reaching a tipping point. The entire safety net, not just life insurance, is under pressure,” said CALI CEO Christine Cupitt.
“Every year we see a growing number of people, particularly younger Australians, leaving the workforce for good due to mental health conditions.”
The rate of TPD claims for mental health among people in their 30s has increased by 732% over the past decade, yet a lump sum payout may not provide lasting financial security, particularly for younger Australians with decades of potential working life still ahead.
“This should not be the story of young Australians experiencing mental ill-health. People are being left with little choice but to label themselves totally and permanently disabled, even where the medical evidence shows there is a chance they could return to work, said Ms Cupitt.
“It is a square peg in a round hole and clear evidence that more needs to be done to build a mentally fitter community. Insurers will always be there for the Australians who are most deeply affected by mental ill health but we are having to rethink how we better serve customers in the decades ahead.”