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Rising Group Premiums Pose Challenges for Australian Life Insurance

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

Insurance premiums for group life policies with long-term benefits have surged between 15% to 25% on average in the first half of the year, according to a mid-year market update from Marsh Australia.

While the steepest increases affected those with adverse claims experiences, short-term rates and premiums for permanent disabilities remained relatively steady.

The sector has also become more selective, with insurers adopting stricter underwriting standards, particularly eschewing high-risk industries.

Significantly, the report highlights that some insurers, troubled by poor claims experiences, have withdrawn from markets such as law firms and insurance companies. This has led businesses to reconsider their employee benefit strategies, leading to potential reductions in group life insurance coverage. Cost-cutting measures such as these may result in individuals being left underinsured.

The causes of claims have stayed consistent, with cancer still the leading factor in life claims and mental illness prominently impacting income protection claims. Of particular concern are mental health claims, which tend to persist longer and contribute substantially to rising claims costs for insurers.

On a positive note, a significant player has reentered the corporate life insurance arena outside of superannuation, presenting much-needed capacity after recent exits by other providers.

According to the Marsh report, these trends observed in the first half of the year are expected to continue for the remainder of the year.

Published:Thursday, 28th Aug 2025
Author: Paige Estritori

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

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Insurance News

TAL's Health Sense Plus Now Covers Income Protection Policies

17 Apr 2026: Paige Estritori

In a significant development for policyholders, leading Australian life insurer TAL has announced the expansion of its Health Sense Plus program to encompass income protection (IP) policies. Effective from 8 August 2025, this initiative aims to incentivise proactive health management by offering premium discounts to clients who engage in preventative health checks. - read more

AFCA Directs Insurer to Reinstate Critical Illness Coverage After Miscommunication

17 Apr 2026: Paige Estritori

The Australian Financial Complaints Authority (AFCA) has recently ruled in favour of a policyholder who inadvertently cancelled his critical illness insurance due to unclear communication from his insurer, TAL Life. This decision underscores the critical importance of transparent communication between insurers and their clients, particularly regarding the implications of policy modifications. - read more

AIA Australia's Latest Enhancements to Priority Protection Insurance

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AIA Australia has recently updated its Priority Protection life insurance suite, introducing changes designed to simplify discounts, enhance policy clarity, and support premium affordability. These enhancements, effective from 9 November 2025, reflect AIA's commitment to providing value-driven solutions for policyholders. - read more

Zurich Australia's New Income Protection for Women's Health

09 Apr 2026: Paige Estritori

Zurich Australia has unveiled a pioneering income protection benefit tailored specifically for women's health conditions, including menopause and endometriosis. This initiative addresses the significant impact these conditions have on women's professional lives and financial stability. - read more

APRA's Renewed Efforts to Reform Income Protection Insurance

09 Apr 2026: Paige Estritori

The Australian Prudential Regulation Authority (APRA) has announced the resumption of its reforms targeting individual disability income insurance (IDII), commonly known as income protection insurance. This initiative aims to address the financial challenges that have plagued the industry, with insurers reporting losses exceeding $3.4 billion over the past five years. - read more

AFCA's Landmark Decision on Occupation Definitions in Income Protection Claims

09 Apr 2026: Paige Estritori

The Australian Financial Complaints Authority (AFCA) has recently delivered a pivotal ruling that clarifies the definition of 'occupation' within the context of income protection insurance claims. This decision arose from a dispute involving a policyholder whose income protection benefits were terminated after the insurer discovered he was listed as a director of a company while receiving payments. - read more

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