Kent Griffin, CEO and managing director of Acenda and co-chair of the Council of Australian Life Insurers (CALI), has identified the national mental health crisis as a collective challenge for Australia’s insurance sector, government, and broader community.
He said the ongoing rise in mental health-related claims is placing increasing pressure on the country’s social and financial safety nets, with annual spending on mental health services now exceeding $13 billion.
“Life insurers play a critical role supporting Australians experiencing mental illness by providing financial protection when it’s needed most. However, the sustainability of this support is clearly under growing pressure,” he said.
Recent data from CALI showed that mental health conditions have become the leading cause of total and permanent disability (TPD) claims in Australia.
Over the past decade, permanent disability claims linked to mental health among Australians aged 30 to 40 have increased by more than 700%.
Life insurers paid out more than $2.2 billion in retail mental health claims last year, nearly double the amount from five years earlier.
Income protection claims related to mental health also remained significant, with $887 million paid in 2024.
Griffin pointed out that the sector is seeing a rapid decline in the mental health of people born in the 1990s.
“Research shows a rapid decline in the mental health of people born in the 1990s over the past two decades, with this cohort exhibiting poorer mental health than previous generations at the same age. Unlike previous generations, they are not showing improvements in mental health as they age,” he said.
This trend is contributing to increased demand for support from insurers, Medicare, the National Disability Insurance Scheme (NDIS), and other public programs.
CALI CEO Christine Cupitt said the sector is witnessing more Australians, particularly younger individuals, leaving the workforce permanently due to mental health conditions.
“Australia is reaching a tipping point. The entire safety net, not just life insurance, is under pressure,” she said. “Every year, we see a growing number of people, particularly younger Australians, leaving the workforce for good due to mental health conditions.”
She explained that while TPD benefits are intended to provide financial assistance, the current model may not guarantee long-term security for younger claimants.
Cupitt noted that some individuals are classified as totally and permanently disabled even when medical evidence suggests a chance of returning to work, prompting the industry to consider changes to better support customers.
Governments have begun to address the sustainability of mental health support through reforms to public insurance schemes.
In Victoria, changes to the WorkCover system have introduced stricter eligibility for mental injury claims, requiring formal diagnoses and proof that employment is the main cause.
New South Wales has also raised concerns about the sustainability of its workers compensation scheme, with proposals to adjust impairment thresholds and refine claim definitions.
Research released by CALI in April 2025 showed a shift in how Australians seek support when unable to work due to mental health issues.
Nearly 40% of respondents said they would rely on government assistance rather than family or social networks.
The same study found that 71% of Australians are concerned about their ability to obtain or keep life insurance due to economic conditions.
Affordability was identified as the main barrier by 62% of respondents, particularly among those earning less than $100,000 annually.
The research also found a gender gap, with more women than men reporting that they cannot afford coverage.
Griffin stated that life insurance must continue to play a role in supporting Australians with mental illness, but the sector faces a trade-off between comprehensive coverage and keeping premiums affordable.
As claims rise, premiums also increase, which can make coverage less accessible, especially during periods of rising living costs.
Both Griffin and Cupitt called for industry-wide collaboration, product innovation, and engagement with stakeholders to ensure that life insurance remains a viable safety net.
“By taking a balanced approach – offering appropriate levels of support, supporting customers with severe conditions, and ensuring long-term viability – life insurers can continue to support financial resilience for Australians during some of life’s most difficult moments,” Griffin said. “Now is the time for thoughtful reform, system-wide collaboration, and a firm commitment to sustainability. Because mental health is not only a national crisis – it is also a shared responsibility.”
