The industry's response risks causing real harm to consumers. It feels like a knee-jerk reaction to suddenly plug every hole, when the growing number of holes have been clearly flagged and identified (to deaf ears) for over a decade. Some of the actions I'm seeing, and have been personally affected by, verge on unlawful, which creates new risks for the industry in itself.

The writing has been on the wall for a long time. Mental health DI claims have sat as high as 25% for years. When customers are allowed to hold both long-term DI and large TPD benefits, overlap and windfall scenarios inevitably emerge, encouraging claims. Several contributing factors have led the industry to this point:

1. Real growth in mental illness. Fundamentally, governments and corporations bear direct responsibility for this

2. Expansion of a pro-claimant and increasingly litigious environment, fostering social narratives of victimhood and entitlement

3. Growth of plaintiff law firms and their involvement in non-disputed claims

4. The Life Code of Practice, while well-intentioned, reinforces points 2 and 3 and imposes simplistic processing rules and timeframes on complex, high-risk decisions

5. Poor claims practices driven by:

a. Under-resourced claims teams

b. Under-skilled claims teams

c. Fear of media and legal implications/costs of defending claims

d. Life Code of Practice obligations overriding prudent assessment and claims management

e. Increased payment of small value claims to "get rid of them"

f. Normalisation of TPD claim acceptance for mental health, often without sufficient scrutiny

g. Efficiency and innovation without, or at the expense of, foundational claims practices

6. Unsustainable Product features designed without regard to insurability principles:

a. Own Occupation TPD cover

b. Reduction of TPD waiting periods from 6 months to 3 months forcing premature assessments of permanent incapacity, often before genuine mental health patients have received adequate care or treatment

c. Waiting period waiver features

d. Overly complicated product filled with noise

e. Occupational definitions reliant on medical opinions, generally accepted from doctors unqualified to assess occupational disablement

f. Vague definitions open to unfavourable court interpretation, with limited industry response

g. Generous DI definitions that discourage return to work

7. Generous underwriting/Product guidelines that have not adequately accounted for over-insurance risks from combined LTIP and TPD cover

8. TPD antiselection is evident with average sum insured for claims lodged within 12 months significantly higher, when compared to claims lodged after 12 months

These trends are unsustainable and require thoughtful and disciplined industry response, to restore balance and protect both consumers and insurers. Unfortunately, media narratives and commentary from industry bodies often gain traction at senior levels, and those levels tend to drive reactive measures.

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