Why did Swiss Re stop writing TPD insurance in Australia?

Swiss Re Life & Health Australia paused new business activities in October 2025 due to concerns about the long-term sustainability of TPD insurance product design. The company cited the changing nature of work, rising claims costs, and a rapid increase in mental health-related TPD claims — which reached more than $2.2 billion in 2024, nearly double the figure from five years earlier. Swiss Re stated it would not seek new insurer clients until the market demonstrates a clear shift to sustainable product design (Swiss Re, media release, 23 October 2025).

Why are TPD insurance claims increasing in Australia?

The primary driver of rising TPD claims in Australia is mental health conditions. Research from CALI and KPMG found that permanent disability claims linked to mental health among Australians aged 30 to 40 increased by more than 730% over the decade to 2022 (CALI/KPMG, December 2024). Academic research from the University of Sydney and the Black Dog Institute attributes this partly to a generational shift in how younger workers respond to workplace stress — with the most recent cohorts showing greater sensitivity to work stressors than equivalent age groups a decade ago.

What percentage of TPD claims in Australia are for mental health?

Mental health conditions now constitute the leading cause of TPD claims in Australia, accounting for approximately one third of all permanent disability claims (CALI/KPMG, 2024). Within TAL's retail TPD book specifically, mental and behavioural disorders were the single largest claims cause at 25% of all TPD claims paid in 2024/25 — ahead of injury and fractures (16%), nervous system conditions (14%), musculoskeletal diseases (14%) and cancer (13%) (TAL, December 2025).

Are TPD insurance premiums going to increase in Australia?

Industry participants have acknowledged that rising mental health claims are placing upward pressure on TPD premiums. CALI co-chair Kent Griffin noted that as claims rise, premiums also increase, which can make coverage less accessible — particularly for those earning less than $100,000 annually. CALI research from April 2025 found that 71% of Australians are concerned about their ability to obtain or keep life insurance due to economic conditions, with 62% citing affordability as the primary barrier.

What is the TPD insurance claims acceptance rate in Australia?

According to APRA's most current data (October 2025 release), TPD insurance claims under advised retail policies are accepted at a rate of 82.9% — the lowest acceptance rate of any life insurance product category in Australia. Death cover achieves a 97.2% acceptance rate, income protection 94.4%, and trauma 86.6%. TPD claims also take an average of 7.5 months to finalise, compared to 1.3 months for death cover and 1.6 months for income protection (APRA, Life Insurance Claims and Disputes Statistics, October 2025).

How has superannuation legislation affected TPD cover in Australia?

Legislative changes between 2019 and 2020 materially reduced default TPD coverage for many Australians. The Protecting Your Super legislation (2019) and Putting Members' Interests First legislation (2020) removed automatic default insurance from inactive accounts, accounts under $6,000, and members under 25. The result was a 29% fall in group TPD cover in superannuation between June 2018 and June 2020 (Rice Warner, Underinsurance in Australia, 2020). Deloitte estimates approximately one million Australians are currently underinsured for Death/TPD as a consequence.

Australia's TPD Insurance Landscape Is Changing: What the Swiss Re Exit and Mental Health Claims Data Mean for Policyholders

10 hours ago
11 min read

In October 2025, one of the world's largest reinsurers announced it would stop accepting new life insurance business in Australia. The decision by Swiss Re Life & Health Australia to pause new business activities was not framed as a retreat — it was framed as a statement about product sustainability. The company said it would use the pause to "drive sustainable product design, particularly in Total and Permanent Disability (TPD) insurance, where there are significant sustainability issues that require urgent attention." The announcement drew attention to a set of pressures that had been building in the Australian TPD market for several years, and that the industry is now being asked to confront directly.

This article summarises the publicly available data, industry commentary, and regulatory context behind those pressures — and what they mean for the current and future shape of TPD insurance in Australia.

Written by Christopher Hall, AdvDipFP | Authorised Representative, AFSL 526688 | March 2026

A Reinsurer Steps Back

Swiss Re's October 2025 announcement was significant not because a reinsurer exiting a market is unprecedented — it is not — but because of how explicitly the company linked its decision to the TPD product category and the mental health claims driving it.

In a statement published on 23 October 2025, Swiss Re cited "the changing nature of work, rising claims costs and evolving societal expectations" as having created "discussion around the long-term sustainability of TPD insurance in Australia." The company noted that the Council of Australian Life Insurers had reported that in 2024, Australian insurers paid more than $2.2 billion in mental health-related TPD claims — nearly double the amount from five years earlier. Swiss Re described this as "creating significant strain on Australia's financial system" (Swiss Re, media release, 23 October 2025).

Paul Murray, CEO of Life & Health Reinsurance at Swiss Re, framed the decision as an opportunity: "The current dialogue represents a chance for renewal. The shared goal across the industry is to preserve the social value of TPD — protecting Australians when they need it most — while creating a model that can endure economic cycles and demographic shifts. This means balancing protection with long-term sustainability to avoid increased premiums, which can contribute to making insurance unaffordable" (Swiss Re, 23 October 2025).

Lloyd Campbell Gibson, Swiss Re's Head of Life & Health Reinsurance for Australia and New Zealand, was more direct: "As an industry, we must transition from the sole focus of claims payment to partnering on an individual's health journey. Through evidence-based changes, TPD can become a more adaptive and accessible form of protection for future generations" (Swiss Re, 23 October 2025).

Swiss Re confirmed it would continue supporting existing retail life insurance company partners while new business activities were paused. The company said it would not seek new insurer clients "until the market demonstrates a clear shift to sustainable product design."

Industry commentary in the weeks following the announcement made clear that Swiss Re's position was not an isolated view. At the third Zurich Sustainability Round Table, David Creaven, Head of Client Partnerships at SCOR Australia & New Zealand, said the decision "should not be viewed as an isolated outlier." He noted that "the issue of sustainability across TPD, both across the retail and the group space, is something that a number of reinsurers and direct insurers have been agitating for" (Zurich Sustainability Round Table, 2026).

Swiss Re Life & Health Australia paused new business activities in October 2025, citing the long-term sustainability of TPD insurance as the primary reason — particularly the rapid growth of mental health-related claims, which reached $2.2 billion in 2024 (CALI, 2025).

The Mental Health Claims Surge: What the Data Shows

The scale of the mental health claims trend in Australian life insurance has been documented across multiple industry and academic sources over the past two years, and the figures are striking.

Research published by CALI and KPMG in December 2024, drawing on a decade of life insurance data, found that permanent disability claims linked to mental health among Australians aged 30 to 40 had increased by more than 730 per cent over the ten-year period — from 37.9 per million in 2013 to 314.9 per million in 2022 (CALI/KPMG, Life Insurance Data Analysis, December 2024). The report found that payments for mental health claims now constitute almost a third of all permanent disability claims in Australia.

Mental health income protection claims also remained substantial. In 2024, $887 million was paid in income protection claims related to mental health conditions (CALI, 2025). By comparison, in 2019, 9,500 Australians received $1.24 billion across all mental health-related life insurance claims (FSC Media Release, November 2020) — an indication of how rapidly the category has grown.

Within TAL's retail TPD book, the most current claims data available shows that mental and behavioural disorders now constitute the single largest cause of TPD claims, accounting for 25 per cent of all TPD claims paid under Accelerated Protection products in 2024/25 — ahead of injury and fractures (16%), conditions of the nervous system (14%), musculoskeletal and connective tissue diseases (14%), and cancer (13%) (TAL, TALR7560/1225, December 2025). TAL paid $122 million in TPD claims across those products in the same period.

Across all TAL products, the group paid over $4.7 billion in claims to more than 54,357 customers and their families in the year to 31 March 2025 (TAL Accelerated Protection PDS, December 2025). The scale of this — from a single insurer — illustrates why questions about product sustainability are being raised at the reinsurance level.

The Generational Dimension

CALI CEO Christine Cupitt has repeatedly described the claims trend in terms of its demographic concentration. "Australia is reaching a tipping point. The entire safety net, not just life insurance, is under pressure. Every year, we see a growing number of people, particularly younger Australians, leaving the workforce for good due to mental health conditions" (CALI, 2025).

The CALI/KPMG data supports this framing. The largest increase in mental health-related permanent disability claims is concentrated in the 30 to 40 age group — working-age Australians in the prime of their earning years. CALI noted that approximately 10 per cent year-on-year growth in mental health TPD claims had been sustained for a full decade (CALI/KPMG, December 2024).

Academic research provides context for the generational pattern. Professor Nick Glozier of the University of Sydney, conducting research in collaboration with the Black Dog Institute into workplace mental health trends, has noted that the most recent cohort of workers not only enters the workforce with higher rates of mental health difficulties, but responds more negatively to any given level of workplace stress than workers of the same age did a decade ago. "We have found that the most recent cohort of workers, not only are more likely to have mental health problems before they enter the workforce, but the mental health of a 25-year-old now is more negatively affected by any given level of work stress than 25-year-olds were a decade ago," he said (ABC News, December 2024). He characterised this as a "changing sensitivity to stress" and confirmed the trend predated both COVID-19 and the cost-of-living pressures of recent years.

CALI research published in April 2025 found additional affordability pressures in the demographic most affected. Among respondents with incomes below $100,000 annually — a category that includes many Australians in the 30 to 40 age bracket — 62 per cent identified affordability as the main barrier to maintaining life insurance cover (CALI, April 2025). A gender disparity was also identified, with more women than men reporting they cannot afford coverage. Kent Griffin, CEO of Acenda and co-chair of CALI, summarised the tension: "As claims rise, premiums also increase, which can make coverage less accessible, especially during periods of rising living costs" (Insurance Business, July 2025).

TPD Claims Performance in Broader Context

The mental health claims surge is occurring against a backdrop of structural pressures on TPD insurance that predate it. A series of regulatory interventions between 2019 and 2021 materially altered the default insurance landscape for Australian superannuation members, with measurable effects on coverage levels.

The Protecting Your Super legislation (2019) and the Putting Members' Interests First legislation (2020) removed or reduced automatic default insurance cover from inactive accounts, low-balance accounts, and members under 25. The effect at an industry level was substantial: between June 2018 and June 2020, group TPD cover in superannuation fell by 29 per cent (Rice Warner, Underinsurance in Australia, 2020). Total death cover sums insured across all channels fell by 17 per cent, and TPD cover fell by 19 per cent across the same period (Rice Warner, 2020).

Deloitte (formerly Rice Warner) estimates that approximately one million Australians are currently underinsured for Death/TPD, and 3.4 million are underinsured for income protection (Deloitte, Underinsurance in Australia, 2020). The cost to government from that underinsurance gap — measured in additional social security payments — is estimated to exceed $600 million per year (Rice Warner, Underinsurance in Australia, 2020).

The claims acceptance rate for TPD under advised retail policies, as reported by APRA, stands at 82.9 per cent — the lowest acceptance rate of any life insurance product category, below death cover (97.2%), income protection (94.4%), and trauma (86.6%) (APRA, Life Insurance Claims and Disputes Statistics, October 2025). TPD claims also take materially longer to finalise than other claim types: an average of 7.5 months, compared to 1.3 months for death cover claims and 1.6 months for income protection claims (APRA, 2025). This reflects the complexity of permanent disability assessments and the volume of medical evidence required.

The combination of a declining acceptance rate, longer processing times, and rapidly growing mental health claim volumes creates the conditions that reinsurers and insurers have described as a sustainability challenge.

Industry Response: Claims Frameworks and Product Redesign

The industry body response to these pressures has been to work on two parallel tracks: updating the frameworks by which mental health claims are assessed, and developing revised product structures that can sustain the protection function of TPD over the longer term.

CALI announced in late 2025 that it was developing a new claims assessment framework for mental health, following consultation with stakeholders. The industry action plan was described as setting out minimum standards for "consistent, evidence-based thresholds" when assessing claims, clarifying the purpose of disability insurance, and reflecting contemporary medical evidence and return-to-work outcomes (CALI, cited in insuranceNEWS.com.au, October 2025). CALI's Keely O'Brien confirmed the body was "working at pace" on claims assessment frameworks within the bounds of regulatory and competition laws (Zurich Sustainability Round Table, 2026).

At the insurer level, product changes are already underway. Ioana Logan, Product Owner for Zurich Propositions, indicated at the Zurich Sustainability Round Table that changes including reductions in maximum TPD cover amounts and lower caps were already in hand. Tim Kane, Zurich's Head of Retail, noted that it would fall to advisers to demonstrate the value of "revised offerings" to their clients (Zurich Sustainability Round Table, 2026).

Eugene Ardino, CEO of Lifespan, offered a more market-oriented view: "The market will sort itself out because it's a competitive marketplace. It's not doing it in the best possible way because it's jacking up premiums to quite high levels, but that's the way the market's currently sorting it out" (Zurich Sustainability Round Table, 2026). He drew a parallel with the professional indemnity market for financial planning, where insurer participation has historically moved in and out over time.

CALI CEO Christine Cupitt framed the industry's response more broadly: "As an industry, we are acting to strengthen our part of the safety net by adapting products to reflect contemporary medical evidence, and working with government, regulators and community partners to build sustainable solutions for mental health and disability support" (insuranceNEWS.com.au, October 2025).

State Government Workers Compensation: A Parallel Pressure

The pressures on private TPD insurance are mirrored in Australia's state-based workers compensation systems, where similar sustainability concerns have prompted legislative responses.

Victoria has introduced changes to its WorkCover system tightening eligibility for mental injury claims, requiring formal diagnoses and evidence that employment is the primary cause of the injury. New South Wales has raised comparable concerns about the sustainability of its workers compensation scheme, with proposals to adjust impairment thresholds and refine claim definitions (CALI/Insurance Business, 2025).

The simultaneous pressure across private insurance and public workers compensation programs reflects the scope of the underlying trend: this is not a problem specific to one product or one jurisdiction, but a systemic shift in the nature and volume of disability claims across Australia's working-age population.

What the Industry Is Saying About the Road Ahead

The positions taken by industry participants in recent months reflect genuine disagreement about pace and mechanism, alongside broad agreement that some form of change is necessary.

Kent Griffin, speaking in July 2025, called for "thoughtful reform, system-wide collaboration, and a firm commitment to sustainability," and described the mental health challenge as "not only a national crisis — it is also a shared responsibility" (Insurance Business, July 2025). He acknowledged the fundamental tension in the market: TPD insurance must continue to support Australians experiencing mental illness, but the increasing cost of that support, passed through in premiums, risks making coverage inaccessible for those who most need it.

Swiss Re's position — that new business will not resume until the market demonstrates a shift to sustainable product design — establishes a de facto timeline for the industry to respond. Whether the response takes the form of revised claims assessment standards, restructured product definitions, reduced cover limits, or some combination of these remains to be determined through the industry consultation processes currently underway.

For the approximately 15 million Australians who held some form of life insurance coverage as at 2022 (FSC/NMG, 2022), the trajectory of these discussions has direct implications for what coverage will look like, cost, and deliver in the years ahead.

Key Statistics at a Glance

Mental health-related TPD claims among Australians aged 30–40 increased by more than 730% over the decade to 2022 (CALI/KPMG, December 2024)
Mental health conditions now constitute the leading cause of TPD claims in Australia, accounting for approximately one third of all permanent disability claims (CALI/KPMG, 2024)
Australian insurers paid more than $2.2 billion in mental health-related TPD claims in 2024 — nearly double the figure from five years earlier (CALI, cited in Swiss Re, October 2025)
Mental and behavioural disorders are the single largest cause category for TPD claims in TAL's retail book, at 25% of all claims paid in 2024/25 (TAL, December 2025)
Group TPD cover in superannuation fell 29% between June 2018 and June 2020 following legislative changes (Rice Warner, 2020)
APRA's TPD claim acceptance rate for advised policies stands at 82.9% — the lowest of any life insurance product category (APRA, October 2025)
TPD claims take an average of 7.5 months to finalise — nearly five times longer than death cover claims (APRA, 2025)
One million Australians are estimated to be underinsured for Death/TPD (Deloitte, Underinsurance in Australia, 2020)
Annual government cost from Death/TPD underinsurance exceeds $600 million in additional social security payments (Rice Warner, 2020)
71% of Australians are concerned about their ability to obtain or keep life insurance due to economic conditions; 62% cite affordability as the primary barrier (CALI, April 2025)

This article is an educational summary of publicly available industry data, research and commentary. It does not constitute financial advice. Sources are cited throughout. For guidance on how these industry developments may affect existing TPD cover, a professional review is the appropriate starting point.

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