The overall payout for disability income insurance doubled to $4.9 billion in the five years to 2018, fuelled in part by a 53% jump in benefit payment for mental health claims, according to a study by the Financial Services Council (FSC) and KPMG.

The findings from the study, which looked at 71,000 new and closed claims for policies bought through the adviser channel from 10 life insurers, is further confirmation of the struggles facing the unprofitable product lines.

Accidents dominated the claims payout at 38%, followed by musculoskeletal on 18%, mental disorders on 11% and cancer on 10%.

All four categories saw a rise in claims during the 2014-2018 period, with mental disorders recording the highest increase at 53%. The study says a 125% jump in incidence of claims amongst men was a huge trigger behind the increase.

Accident claims grew 23%, cancer claims 31% and musculoskeletal 7%.

“Total claims benefits for mental health conditions have more than doubled in the past five years,” KPMG Actuarial Partner Briallen Cummings said.

“More people are now focusing on their mental well-being, which we see in people taking longer to return to work after a mental health event.

“Mental health claims tend to take longer to be reported and assessed than other causes of claims, but the payout rate by insurers is high and reflects the importance of our community in supporting these individuals in a return to health and work.”

FSC CEO Sally Loane expects the study to support ongoing efforts to improve the financial viability of the products.

“A key aim of the FSC/KPMG life insurance data project is to steer the industry towards a sustainable and affordable disability income insurance product,” she said. “This is, of course, a key goal for the life insurance industry, and even more so for Australian consumers.”

The Australian Prudential Regulation Authority has singled out the products for attention, imposing insurers with extra capital requirements and warning it stands ready to escalate its actions if the situation does not improve.