Australian life insurer Acenda has introduced a new TPD Severity option to its total and permanent disability (TPD) insurance portfolio.
The addition, developed in consultation with financial advisers, is designed to enable more tailored insurance solutions for policyholders by allowing advisers and customers to combine TPD Severity with other TPD coverage levels.
The move comes as the industry experiences a notable rise in TPD claims, particularly those linked to musculoskeletal and mental health conditions.
Acenda’s internal analysis shows a 166% increase in retail TPD claims related to musculoskeletal issues and a 171% increase in claims for mental health conditions from 2018 to 2023.
These findings are consistent with broader industry research, including data from the Council of Australian Life Insurers (CALI) and other insurers such as TAL, which have identified mental health as a leading factor in recent income protection and TPD claims.
Gerard Kerr, chief executive, individual insurance at Acenda, said the insurance sector is facing new challenges as the nature of work and medical diagnosis evolves.
“The way we work, recover, and diagnose conditions has changed significantly since TPD insurance was first introduced, but product offerings have not always kept pace,” he said.
Acenda pointed out that traditional TPD definitions can be difficult to apply to conditions like musculoskeletal disorders and mental illnesses, which may fluctuate in severity or present episodically. It also noted that rising premiums could restrict access to TPD cover for many Australians.
Kerr explained that the TPD Severity option uses established medical impairment benchmarks to assess both the severity and permanence of disabilities, covering both physical and mental health conditions.
“TPD Severity provides customers and advisers with more clarity and consistency when making a claim by using established medical benchmarks to assess the severity and permanency of an injury or illness,” he said.
The new option is intended to give advisers greater flexibility in structuring cover for clients, with Acenda providing additional education and resources to support their recommendations.
“We have collaborated with advisers to design a solution that reflects modern medical and employment realities, helping more Australians access meaningful and affordable protection,” Kerr said.
Acenda’s TPD Severity option is positioned as a response to the changing landscape of disability claims and the need for adaptable insurance products.
The insurer stated that the new offering will complement its existing TPD range, with an emphasis on affordability and choice for customers.
