What's the difference between APRA's pre-2021 IP rules and the current rules?

APRA's October 2021 IDII reforms ended agreed-value cover, capped replacement at 70%, introduced a mandatory 24-month income reset, and tightened occupation-class benefit periods. All retail IP issued from 1 October 2021 conforms to the new framework. Pre-2021 'legacy' contracts continue under their original terms but are no longer sold.

The reforms followed sustained underwriting losses across the industry. APRA's December 2019 and May 2020 letters to insurers set the trajectory; the October 2021 Information Paper Individual Disability Income Insurance set the operational framework.

The five material changes

1. Replacement cap fixed at 70%

Pre-2021 contracts allowed up to 75% of pre-disability income (and in some structures higher with super-contribution top-ups counted in). Post-2021 contracts on the panel are capped at 70% of monthly pre-disability income, with tiered reductions above stated thresholds.

See AIA Priority Protection PDS (Version 32, 9 November 2025), Section 5.1.2 (70% of monthly Pre-disablement Income); TAL Accelerated Protection PDS (12 December 2024), Section 2.6 (70% of the first $25,000 per month); Zurich Wealth Protection PDS (1 November 2025), Income protection section (You can insure up to 70%).

2. Mandatory 24-month income reset

After 24 months of continuous benefit payments, the insurer recalculates the benefit based on what you would now be earning. Legacy contracts paid the original benefit indefinitely. Post-2021 contracts reset.

See OnePath OneCare PDS (October 2025), Income Secure Cover (After two years on claim, assessment of disability will not be based on the [original income]); AIA Priority Protection PDS Section 5; Encompass Protection PDS (26 September 2025), Income Protection Cover (on claim for any one or related illness or injury for longer than 24 months, the definition of for total disability and partial disability under the any [occupation test applies]).

3. Agreed value cover ended for new business

APRA banned new Agreed Value contracts effective 31 March 2020. All current panel PDSs are indemnity-only. Existing Agreed Value cover continues for legacy policyholders.

See AIA Priority Protection PDS (Agreed Value Income Protection insurance cover is only available if the Policy is replacing an existing Priority Protection Agreed Value Income Protection insurance cover); Zurich Wealth Protection PDS (This policy provides indemnity cover).

4. Benefit-period restrictions by occupation class

Most panel insurers now restrict 'to age 65' benefit periods for heavy-manual occupation classes. Some classes can only access 2- or 5-year benefit periods on new contracts. ClearView is explicit: CC2 and CC5 occupation-class codes signal a 2-year or 5-year maximum benefit period. See ClearView ClearChoice PDS (13 May 2024, update 5 June 2025), occupation guide.

5. Enhanced underwriting standards

More evidence required at application, particularly for variable-income earners. Tighter income-evidence tests. Wider use of declined-cover loadings for material health history. The aim was to reduce the historical claims-versus-premium imbalance that triggered the reforms.

What this means in practice

If you hold a pre-2021 policy

Do not let it lapse without understanding what you would lose. Post-2021 replacement cover will not match the pre-2021 terms. Specific features worth checking on a legacy policy:

• Replacement cap (may be 75%, with super-contribution top-ups)
• Agreed value structure (no income evidence at claim)
• No 24-month income reset (benefit paid at the original amount indefinitely)
• Wider own-occupation definition windows
• Longer benefit periods available across more occupation classes

If you are buying new IP today

You are buying a post-2021 product. Focus the comparison on the operational elements rather than legacy-style features:

1. Benefit period available for your occupation class
2. Maximum monthly benefit and anti-stacking limits
3. Partial benefit definition
4. Mental-illness handling on claim
5. 24-month reset clause mechanics
6. Indexation method (CPI versus floor)
7. Built-in versus optional benefit list

Regulator references

• APRA Information Paper, Individual Disability Income Insurance, October 2021 (apra.gov.au)
• APRA Letter to All Life Insurers, December 2019 (initial sustainability measures)
• APRA Letter to All Life Insurers, May 2020 (further sustainability measures including agreed-value ban from 31 March 2020)
• Insurance Contracts Act 1984 governs all panel contracts.