In December 2019, the Australian Prudential Regulation Authority (APRA) wrote to life insurers to address ongoing concerns about the sustainability of individual disability income insurance (IDII) products. 

At that time, the industry had collectively lost A$3.4 billion over five years through IDII products, and APRA stressed that urgent action was required to transform the industry. It was time for the financial watchdog to intervene.

Fast forward more than a year and life insurers are bracing for a busy stretch as they seek to implement the sustainability measures mandated by APRA. 

The onset of the COVID-19 crisis caused a temporary delay, but the three components of APRA’s sustainability measures [see breakout on pg.57] will take effect from 1 October this year. 

The measures include shorter contract terms, benefits that better reflect a claimant’s income at the time of a claim and the availability of timely and detailed data.

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