60% of TPD Claims Denied as Insurers Use Narrow Tests and Evidence Asymmetry

BRISBANE, QLD, AUSTRALIA, October 16, 2026 /CourierPR/ -- Aussie Injury Lawyers has revealed that 60% of total and permanent disability (TPD) claims are being denied by insurers, according to new data from the Australian Prudential Regulation Authority (APRA) for 2025. This figure is particularly concerning as TPD claims account for 88% of all life insurance claim disputes, despite making up only 64% of claims lodged.

According to an ASIC review of over 26,000 TPD claims, the denials are concentrated in a narrow test. Only 4% of claims were assessed under the activities-of-daily-living definition, and 60% of those were declined. Claims involving mental health or musculoskeletal conditions were roughly five times more likely to be rejected than others. This pattern, which advocacy groups have described for years, is now confirmed by the regulator's own sample. The issue lies in the fact that the further a condition is from a single verifiable event, the more likely the claim fails, because permanence is hard to prove on paper.

Insurers use three mechanisms to make denials look routine. First, there is "definition drift," where TPD policies commonly require that the claimant be unlikely ever to work again in any occupation for which they are suited by education, training, or experience, not just the job they held. The gap between "can't do my job" and "can't do any job" is where most claims fail.

Second, there is "evidence asymmetry." Insurers have legal teams, in-house medical reviewers, and a financial interest in the outcome. Claimants, on the other hand, have a treating doctor with a waiting list, a form, and no legal training. This imbalance often results in claimants struggling to build a strong case.

Third, there is "friction by design." Disputes are time-limited, paper-heavy, and procedurally unforgiving. APRA's data shows that in most resolved disputes, the insurer keeps its original decision anyway. This means that a person navigating a serious diagnosis while facing loss of income is not well placed to build a case file.

The concentration of claim disputes indicates that the problem is not individual claimants misunderstanding their policies. Instead, the claims model is generating denials faster than it is resolving them. The people absorbing the cost are those most vulnerable.

Aussie Injury Lawyers is advocating for reform. They are calling for plain-language definitions, standardized disclosure of TPD definitions in clear English, and notification to members whenever the definition changes. They also want mandatory publication of appeal outcomes, with insurers and superannuation trustees reporting denial and overturn rates annually. Additionally, they are pushing for a statutory right to reasons, ensuring claimants receive a written, itemized explanation of the evidence relied on in a denial. An independent review before escalation, funded and no-cost, by a reviewer with no involvement in the original decision, is also part of their proposal. Finally, they are advocating for extended appeal windows, with timeframes that account for illness, hospitalization, and incapacity.

The company believes that reforming the definitions, publishing the numbers, and funding the reviews will reduce the volume of disputes. Without these changes, the concentration of complaints is likely to continue.