‘Reasonableness’ key to TPD definitions

Work needs to be done on deciding what is "reasonable" in the context of new Total and Permanent Disability (TPD) definitions in the group insurance space.

A white paper generated by MetLife Australia and Swiss Re out of a Life Rehabilitation Summit conducted earlier this year has pointed to some of the uncertainty created by changes to TPD definitions.

It said it had been a turbulent time in the TPD landscape and the recent changes to product definitions were an attempt to meet changing demands and were starting to reference an individual's capacity for future reasonable retraining and rehabilitation to assist a return to meaningful employment.

"The emergence of these new definitions will shape the management of TPD claims and the way in which both in-house and external provider rehabilitation resources are utilized," the white paper said.

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"It is critical that life insurers make sound, evidence-based decisions on TPD claims under these new definitions and adapt employability assessments to encompass these changes."

It said that what was deemed "reasonable" would feature heavily with the new TPD definitions but, at this stage, there existed no definition of "reasonable" and the sector would require new case law to test its meaning.

The white paper drew on the views of a panel of rehabilitation experts that there was a need to consider the factors that might contribute to ‘reasonableness' — "for example, there must be a commitment from the claimant, as case law from 2008 highlights, to mitigate their claim".

It said other factors included time, duration, and capacity for retraining.

The white paper reflected the experts' view that, "in the current claims landscape where many TPD decisions are litigated and challenged, the need for robust and reliable evidence and assessment has never been more important".