The Council of Australian Life Insurers warns the industry is being “pushed to the limits” amid a sharp rise in the number of people leaving work due to mental health conditions.  

It says mental health has become the leading cause of total and permanent disability claims, accounting for nearly one in three payouts.  

Life insurers paid $2.2 billion for retail mental health claims last year, nearly double the amount in 2020, with more than $884 million relating to income protection.

Council CEO Christine Cupitt says the “entire safety net, not just life insurance, is under pressure.  

“Every year, we see a growing number of people, particularly younger Australians, leaving the workforce for good due to mental health conditions.”  

Ms Cupitt says the rate of TPD claims among Australians in their 30s has risen 732% in the past decade. 

“People are being left with little choice but to label themselves totally and permanently disabled, even where the medical evidence shows there is a chance they could return to work.  

“It’s a square peg in a round hole and clear evidence that more needs to be done to build a mentally fitter community.

“Insurers will always be there for the Australians who are most deeply affected by mental ill health, but we are having to rethink how we better serve customers in the decades ahead.”