The Total and Permanent Disability product sold in Australia has some quite significant sustainability issues that require urgent attention from the industry, according to a senior Australian executive at Swiss Re.
Kresh Wright, Swiss Re’s Head of Life and Health, Australia and New Zealand, told Riskinfo the insurance industry needs to “…confront some of these TPD challenges head-on so that we can ensure the sustainability of this product, which is crucial as a risk management tool for consumers.”
She notes the key thing in terms of the sustainability of the product is that it needs to better support the working population and deliver more effectively when a customer does suffer a severe health incident.
Wright, who leads a multi-functional team to deliver reinsurance solutions for Swiss Re, explains that TPD was designed many years ago when the workplace was very different. The product was then focused on supporting individuals who were unable to continue to work because they had an accident in the workplace that resulted in a physical injury.
However, she says, today the environment we work in and the occupational risks can be quite different. In turn, medical technology, medical advancements and access to healthcare are also very different from when the product was developed.
She says Swiss Re believes that this idea of permanent and permanence doesn’t exist in the same way as it did many years ago when TPD was first designed.
“That’s why we believe TPD sustainability needs to be addressed and if we can look at the product as an industry and redesign it… it would better meet the needs of customers today.”
Wright says TPD should be dependent on the disability the customer is actually experiencing but also be a product that can support customers through that disability.
That could be through early intervention, medical support or setting in place a path to help them back to work, if that’s appropriate for them.
…ultimately, for me it’s about a product that is simple, relevant to customers, that is fit- for-purpose, is affordable and continues to be all of those things going forward…
“But ultimately, for me it’s about a product that is simple, relevant to customers, that is fit- for-purpose, is affordable and continues to be all of those things going forward.”
She says one of the key areas to look is severity-based products, noting that with the different access to healthcare what might have been what a permanent disability many years ago may actually be treatable today.
Wright says that mental ill health has become far more prevalent over recent years and common mental health conditions attract less stigma and encouragingly more people are seeking help. She says placing a label of ‘totally and permanently disabled’ on someone with a mental health condition can be damaging and is part of the reason why this product may no longer be fit for purpose.
…it’s important we have a product that allows us to support someone back to good health rather than a product that is focused on proving permanent disability…
“And with such different illnesses now for us to deal with, I think it’s important we have a product that allows us to support someone back to good health rather than a product that is focused on proving permanent disability.”
She notes that “almost pushing someone towards demonstrating they are permanently disabled” means it is difficult to then get them out of that mindset and get them back to the best outcome for them in the longer term, adding that being in work plays a big role in people’s general health and wellbeing.
Wright believes there is broad market acknowledgement in the insurance industry that something needs to be done on TPD, particularly as the industry comes out of the phase of reviewing IDII.
“I get the strong sense the industry is turning to the TPD product now. I’ve had conversations with an industry body and know that sustainability is high on the radar, so I’m hoping that this is the start of a groundswell in terms of industry movement towards sustainability for TPD,” she states.