- Agree (57%)
- Disagree (32%)
- Not sure (11%)
Ahead of a TPD Round Table later this week, Riskinfo is seeking your view as to whether you think Total and Permanent Disability in its current state remains sustainable and fit for purpose.
With the industry having recently undergone an Income Protection Insurance transformation – imposed on the sector by APRA’s regulatory intervention, the industry now appears to be directing its focus to the sustainability of Total and Permanent Disability products.
A long list of issues attach to TPD in Australia in its present form. These issues, almost all of which exist under the umbrella descriptor of ‘Sustainability’, include areas such as:
- Affordability
- The rise in the incidence of mental health issues and therefore mental health claims
- Defining ‘permanency’ in an era of medical advancements
- The emergence of ‘return to work’ and rehabilitation programs
- The seeming conflict between meeting a TPD definition and returning to wellness
All of these issues apply to current-day TPD products – but the environment in which this product exists today is very different to that into which it was launched in 1960s Australia. Those were very different times in many ways, not least of which was the make-up of the Australian work force, its greater emphasis on the blue collar and manufacturing sectors and the protections that needed to be made available for those Australians (and others) in those times.
Do you think TPD in Australia needs to be ‘reimagined’? Do you think the industry needs to act before the spectre of another APRA intervention looms large? Is it possible for the sector to self-regulate on the issue TPD sustainability? And – importantly – what has been your own experience as an adviser or a support team member or a licensee or as another industry stakeholder when it comes to serving the TPD needs of the Australian consumer?
Tell us what you think and we’ll report back next week…
There is one certainty based on the past decade of “Government intervention and improvements,” in that every time the Government gets involved, it becomes a maze of red tape, restrictions of trade and any supposed consumer protections, disappear as quickly as a balanced Government budget.
Every time the Advised Life Insurance sector has come under scrutiny and the Government called for submissions, it was like a swarm of bees to a honey pot from vested interest groups who had ZERO interest in what was good for the entire Industry and consumers.
We then had people in Government and in ALL the Regulatory fields, very few of whom had enough experience to even understand what was right, wrong or bald face lies, to wade through a mountain of viewpoints that had little need for accuracy and no accountability, which meant the real truth and answers was lost in transit to the loudest voices with the deepest pockets in Lobby town.
If we fall for the same trick again, there is no hope.
The lunatics running the asylum syndrome will keep on keeping on unless strong people with experience and the strength of character can put all the vested interest parties and institutionalized robots back in their boxes.
As we speak, there is a very interesting and relevant case soon to appear in the Federal Court.
It’s already been the subject of an AFCA complaint and an AFCA decision to pay a TPD benefit for a back problem even though the policy was underwritten some 20 years ago, and a back exclusion was applied. AFCA have refused to publish its reasons.
The insurer, Resolution, is now appealing the case to the Federal Court. Every adviser in this country should be asking this question: how is it that a life insurance ombudsman can award a decision against an insurer on a TPD claim when there was a back exclusion in place from policy inception.
Because AFCA has not published its decision we do not know whether it was a full back exclusion but as the policy was an advised policy from AMP, it’s a pretty reasonable assumption to make that AMP would have applied a full back exclusion. In my experience AMP has never ever considered that they could exclude a PART of the SPINE when there was evidence of prior back history.
The fact that AFCA can make such a decision in the face of what ought to be a simple case, is mind-boggling.
If the decision stands in the Federal Court then every life insurer in this country will have to revise its TPD premiums.
That will add to what I argue is the real problem with TPD. The facts are that a TPD benefit paid from an industry superfund, where the cover is DEFAULT, and therefore not underwritten, together with the existence of a body like AFCA, is the principal cause of lack of profitability on TPD. That’s because all TPD risk, whether underwritten or not underwritten,, is placed in a statutory number one fund.
It used to be that those statutory number one funds had to be solid with a majority of fully underwritten risk before an insurer would dabble in the gamble that is industry fund default cover. One wonders whether Apra, once again, have been asleep at the wheel and then will, horrors of horrors, take yet another NUCLEAR OPTION decision without consulting those at the front – risk advisers.
Apra have a track record. They are so naïve as to what goes on in the real advising world that they thought advisers would stand up and automatically replace their clients pre-2021 income protection contracts with the templated rubbish now available.
Hands up all those who think Apra might ask and risk specialists what they think about any proposed changes to TPD coverage.
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