APRA Reports Surge in TPD and Disability Income Insurance Disputes

In the 12 months ending December 2025, life insurance claims for regulated funds totalled 117,219, a slight decrease of 1.2% from the previous year. Despite this overall decline, the number of disputed claims rose by 13.7%, reaching 11,207 compared to 9,851 in the prior year. Notably, TPD and DII claims comprised 64% of the total claims made during this period, underscoring their prominence in the dispute landscape.

Disputes were particularly prevalent in group insurance within superannuation, which accounted for 56% of all claim disputes. Individuals who received advice constituted 33% of the disputes. Within these segments, DII disputes were the most frequent, with group superannuation disputing 3,194 claims and advised individuals disputing 2,118 claims. TPD claims followed closely, with 2,913 disputes in group superannuation and 934 among advised individuals.

The high incidence of disputes in TPD and DII claims may be attributed to several factors. The complexity of these products, varying definitions of disability, and the subjective nature of assessing claims can lead to misunderstandings and disagreements between insurers and policyholders. Additionally, the increasing prevalence of mental health-related claims adds another layer of complexity to the assessment process.

For business owners and executives, these findings underscore the importance of thoroughly understanding the terms and conditions of life insurance policies, particularly those related to TPD and DII. Clear communication with insurers and seeking professional advice can help ensure that coverage aligns with expectations and reduces the likelihood of disputes.

Insurers, on their part, are encouraged to review their product designs, claims assessment processes, and communication strategies to address the root causes of disputes. Enhancing transparency, simplifying policy language, and providing comprehensive support during the claims process can contribute to improved customer satisfaction and trust in the industry.

As the life insurance sector continues to evolve, addressing the challenges associated with TPD and DII claims will be crucial in fostering a more resilient and customer-centric industry. Both insurers and policyholders have roles to play in achieving this goal, through proactive engagement, education, and collaboration.