Longer Lives, Higher Claims: What Chronic Illness Means for Employers

Zurich’s analysis ranked Australia strongly for overall health system effectiveness among OECD countries, reflecting relatively low mortality and solid healthcare capacity. However, the picture becomes more complex when morbidity is considered. In practical terms, Australians may be surviving serious health events more often, yet living and working with long-term conditions that require ongoing treatment, modified duties or extended time away from work.

The insurer identified mental health, musculoskeletal and neurological conditions as leading contributors to Australia’s chronic illness burden. It also reported that these three categories accounted for close to 60 per cent of Zurich claims in 2025. For company leaders, that finding reinforces why life, TPD, trauma and income protection arrangements should be reviewed as part of broader risk management, not treated as a set-and-forget employee benefit.

This development also extends recent industry discussions about the sustainability of disability and mental health-related claims. If chronic illness continues to place pressure on claims pools, businesses may see tighter underwriting, changing policy definitions, higher premiums or greater emphasis on early intervention and rehabilitation services. Employers that offer group life insurance should pay close attention to how insurers are responding, particularly where cover is used to attract and retain senior staff or support families after a serious diagnosis or death.

For SMEs and larger organisations alike, the message is clear: corporate life insurance needs to be aligned with the real health risks present in today’s workforce. That means considering age profiles, hazardous duties, executive dependency, mental health exposure, claims support processes and whether key person cover would protect the business if a founder, director or specialist employee could no longer contribute.

There is also a positive side. Better data can help insurers, employers and advisers design more targeted prevention and recovery strategies. Wellness programs, flexible return-to-work pathways and clearer claims communication may all reduce disruption while improving employee outcomes.

Businesses reviewing their arrangements should focus on:

• whether benefit levels remain appropriate for salaries, debt and family obligations;
• whether key person insurance reflects the financial impact of losing critical personnel;
• how claims are managed and communicated during stressful periods;
• whether premium sustainability has been tested under changing health trends; and
• whether specialist brokers can compare suitable policies across the market.

As chronic illness becomes a larger part of Australia’s working life, employers that act early will be better placed to protect their people, preserve business continuity and manage insurance costs with confidence.