Violations of the life insurance industry’s rules on timely income protection payments increased by 67% in 2024-25
The increase may have to do with the growing proportion of Australians who have been permanently disabled by a mental health condition
Life Insurance Code Compliance Committee also calls out a notable increase in complaints about Total and Permanent Disability (TPD) claims in recent years
Losing the ability to work because of illness or injury would strike a devastating financial blow for most of us. The ripple effects would be far-reaching, from mounting bills all the way to the prospect of defaulting on a mortgage.
This is where income protection insurance is supposed to come in. It’s generally an opt-in inclusion if you have insurance through your superannuation account, and it can also be obtained through a financial adviser or directly from the insurer.
There are conditions on how long it lasts and whether you qualify for it, but, when it works as advertised, having a significant portion of your income restored (generally around 75%) can keep the economic wolves at bay.
The problem is that the insurance industry has a shaky record on living up to its obligations. The delay between making an income protection claim and receiving payments can be unreasonably long, and the level and quality of communication from your insurer after you lodge a claim can be poor, sometimes very poor.
The problem is that the insurance industry has a shaky record on living up to its obligations.
The latest Life Insurance Code Compliance Committee (Life CCC) annual report reveals the situation is getting worse.
The Life CCC monitors compliance with the Life Insurance Code of Practice, which as of July 2023 has required insurers to finalise income protection claims within five business days of receiving the information they need to decide whether to pay the claim or not.
For many policyholders in financial year 2024-25, it took a lot longer than that.
Violations of the code’s rules on timely income protection payments increased by 67% over the previous financial year, from 997 in 2023-24 to 1663 in 2024-25. The number of affected insurance customers went from 1000 to 1676. The data was provided to the Life CCC by insurers in accordance with their mandatory reporting requirements. It’s unclear whether these numbers tell the whole story.
Life CCC chair Jan McClelland says income protection benefits “are designed to provide financial stability at a time when customers may be at their most vulnerable. Delayed payments can place additional strain on people who are already dealing with significant personal and financial challenges.”
Experiencing a communication breakdown with your insurer only makes matters worse.
“When customers don’t receive timely and clear information at the start of a claim, it can create uncertainty at an already stressful time,” McClelland says.
“Clear communication helps people understand what to expect and supports better outcomes throughout the claims process.”
The increase in income protection code breaches may have to do with the growing proportion of Australians who have been permanently disabled by a mental health condition.
According to a November 2025 report by the Council of Australian Life Insurers (CALI), the proportion had more than doubled over the previous 10 years, and there was a 40% increase in temporary disability payments due to a mental illness over the same time period.
When customers don’t receive timely and clear information at the start of a claim, it can create uncertainty at an already stressful time
Life CCC chair Jan McClelland
The insurance industry’s discrimination against people suffering from a mental illness is well documented, and many organisations have called for reform, including Beyond Blue, Mental Health Australia, the Justice and Equity Centre and Sane Australia.
Income protection – both having cover rejected and having claims delayed or denied – is a particular area of concern.
In December 2023, CHOICE conducted a mystery shop of 15 travel insurance providers and found widespread discrimination against customers disclosing a pre-existing condition of depression with anxiety, one of the most common mental illness combinations in Australia.
Your first step is to lodge a dispute with the insurance provider, which would have 45 days to respond. If you have income protection insurance through your super fund, lodge a dispute with the fund.
If you don’t think the response is fair or don’t receive one, you can escalate your dispute to the Australian Financial Complaints Authority (AFCA).
AFCA receives more complaints about income protection insurance than any other product category by a wide margin. There were 530 in 2024-25 as compared to 359 for the second most-complained about product, term life insurance.
In 2024-25, the insurers with the most disputes about income protection cover (per 100,000 policyholders) were:
Purchased through financial adviser: Resolution Life, 1110 disputes.
Purchased through superannuation: ART Life, 194 disputes.
The Life CCC also called out a notable increase in complaints about Total and Permanent Disability (TPD) claims in recent years.
McClelland says TPD claims are “often made in difficult and complex circumstances and customers need confidence that insurers’ processes will support timely, consistent and well communicated outcomes”, something that appears to be happening with declining frequency.
In 2024-25, the insurers with the most disputes about Total and Permanent Disability cover (per 100,000 policyholders) were:
Purchased through financial adviser: Resolution Life, 278 disputes.
Purchased through superannuation: Resolution Life, 4140 disputes.
McClelland says insurers need to take the Life CCC’s findings on board.
“Understanding the drivers of dissatisfaction is an important step in improving both processes and customer experience.”
Andy Kollmorgen is the Investigations Editor at CHOICE. He reports on a wide range of issues in the consumer marketplace, with a focus on financial harm to vulnerable people at the hands of corporations and businesses. Prior to CHOICE, Andy worked at the Australian Securities and Investments Commission (ASIC) and at the Australian Financial Review along with a number of other news organisations. Andy is a former member of the NSW Fair Trading Advisory Council. He has a Bachelor of Arts in English from New York University. LinkedIn
Andy Kollmorgen is the Investigations Editor at CHOICE. He reports on a wide range of issues in the consumer marketplace, with a focus on financial harm to vulnerable people at the hands of corporations and businesses. Prior to CHOICE, Andy worked at the Australian Securities and Investments Commission (ASIC) and at the Australian Financial Review along with a number of other news organisations. Andy is a former member of the NSW Fair Trading Advisory Council. He has a Bachelor of Arts in English from New York University. LinkedIn
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