Deep insights from the past to build a better future

Income Protection products protect a core need of Australians, the ability to earn an income. Over the last few years, there has been a rise in the cost of claims which has led to an increase in the cost of cover across the whole industry, placing pressure on affordability and jeopardising the ability of Australians to protect this core need when it is truly required.

Over time, life insurers have made incremental changes to Income Protection products to be competitive in the market and meet the ever-changing expectations of advisers and customers. These changes, however well-intended, have often resulted in unexpected outcomes, including circumstances where customers may be financially better off on claim when compared to earnings prior to claim. This is a key driver of the more than $3.4 billion of industry losses  over a five-year period, resulting in repeated significant premium increases for Income Protection across all life insurers. 

The intervention by the Australian Prudential Regulation Authority (APRA) has been a necessary circuit-breaker the industry sorely needed to realign the role of Income Protection in the lives of Australians, and ensure products are built for the lives we live today. 

At TAL, the chance to step right back and start with first principles, re-imagining the way products operate so that they are fit-for-purpose, with a focus on long-term sustainability has been uniquely rewarding. One thing that became really clear was that we had a job to do in redefining what we meant by the term ‘sustainability’. For us, this boiled down to fairness; ensuring that our products continue to meet the genuine needs of all customers, including those customers who need to make a claim, as well as those customers who may not claim, while ensuring all customers have access to affordable cover over the long-term. 

As the market evolves through this period to respond to APRA’s intervention, we are confident that our product solutions will more fairly distribute benefits and better align with the genuine customer needs of today. 

TAL’s experience in the Income Protection market meant we could draw on over 10 years of Accelerated Protection claims and take a deep-dive analysis of more than 2,500 individual Income Protection claim files. We went into this process with open minds, and with a view to challenge commonly held beliefs and historical approaches at every stage. 

We’ve also been on a mission to uncover new insights and ideas – from how we describe Income Protection to new customers to how we support them at claim time. Our team listened, researched, and tested ideas with hundreds of advisers and their clients to make sure we truly understood what they really valued. 

And the result? A range of product options which are truly tailored to customer needs today, anchored in real client and adviser insights.

These changes to Income Protection products bring about fundamental shifts in design and there’s no doubt that there will be a period of adjustment while the market becomes familiar with the new product options on offer. A commitment to bettering the industry, and ensuring existing products continue to evolve alongside  new ones, can help deliver a better experience for all.  

We are confident that TAL’s new Income Protection product options will continue to meet the protection needs of our adviser partners and their clients, while enabling advisers to provide confidence to their clients that the Income Protection product options available to them are valuable, fair, and effective now and into the future.

[1] https://www.apra.gov.au/sustainability-measures-for-individual-disability-income-insurance