Regulatory Changes to Income Protection Policies: What You Need to Know

Insurance Updates

Australian Prudential Regulation Authority (APRA) is making changes to income protection policies to ensure the product can continue to be offered in the market. This article outlines the changes coming into force from October 1, 2021, and how these changes may affect you, whether you have an existing policy or not. 



The income protection sector has lost more than $3 billion over the last 5 years, after paying out approximately $5 billion in claims during this period (KPMG, 2020). With generous products being offered by insurers to win business, a 53% increase in mental health claims over the last 5 years, and a 36% increase in length of claim time, changes are needed to ensure the industry and income protection product is sustainable (KPMG, 2020).

In a recent insurer webinar hosted by TAL Insurance, it was stated that the original purpose of insurance was not intended to put the claimant in a better position, but to provide a level of cover throughout a time of need. Geoff Summerhayes of APRA said, “life [insurance] companies have been keeping premiums at unsustainably low levels and designing policies with excessively generous features and terms that, in some cases, provide a financial disincentive for policyholders to return to work”. Changes need to be made to ensure the longevity of income protection policies.



One key change to income protection policies occurred on April 1, 2020, namely removing the agreed value. This change means a claimant’s income is assessed at the time of claim, as opposed to at the time of application. The largest effect is likely to be felt by those with fluctuating year-to-year incomes such as the self-employed.

The biggest changes will be imposed for all new policies from October 1, 2021.  These are:

  • Income replacement ratios to be reduced from 75% to 70%. This means in the event of an income protection claim after October 1, 2021, the claimant would receive up to 70% of their income after 6 months of the claim.
  • During the first 6 months of a claim, a claimant is entitled to up to 90% of their income, depending on the policy they have entered.
  • Income will be calculated over the 12 months before the claim, compared to some current policies which use the highest rolling 12-month income over the last 2 or 3 years to smooth out fluctuating income.
  • Guaranteed renewable policies will no longer exist. Long benefit periods, such as to age 65, will be managed and reviewed to help ensure there is motivation to return to work. Insurers understand that long-term claims are costly to businesses and in effect, cause premium increases for existing clients.
  • This may include changing from “Own Occupation” to “Any Occupation” definition after 2 years on the claim. Own occupation” refers to the individual’s job when they make a claim, “any occupation” refers to an occupation the individual can fulfil, despite still being unfit for their own occupation.



If you already have an income protection policy:

No immediate action is required.  You will be able to maintain your policy. However, a review to ensure the policy is appropriate is encouraged.

If you do not have an income protection policy:

Until October 2021, you can still take out aincome protection policy that has a 75% income replacement ratio, an indemnity definition with the best 12 month income period over 3 years, and many additional benefits such as a critical illness benefit, defined/scheduled injury benefit, a bed confinement benefit, and minimum weekly working hours.




Find out more about Income Protection and how it works in our guide Income Protection: Your Top Five Questions Answered. With the changes set to take effect from October 1, this is an opportune moment to review your existing policy or understand your options.  Feel free to reach out at any time.


Tyler Scarce

Risk Adviser



Discover more abouincome protection.

Income Protection: Your Top Five Questions Answered

Life Insurance

“I don’t own a house, so do I need life insurance?” is a question I receive a lot in my role. My response is always: “what is your most important asset?”

While the common replies to this question are “my car” or “my phone”, the real answer is actually something less tangible.  For a large percentage of the working population, the ability to earn an income is your most important asset, and in many cases, your family’s most critical asset.

If you are unable to work for an extended period due to injury or illness, and your sick leave and annual leave allocations have been exhausted, it can be challenging to support yourself financially – particularly if you are self-employed.  Here are some simple answers to other common questions and misconceptions about Income Protection.



Income protection insurance is a monthly payment aligned to a maximum of 75% of your income at the time of application. If you need to make a claim, the benefit will start once the waiting period has been exhausted and will continue to pay a monthly benefit until you return to work or the benefit period expires, whichever comes first.  



Income protection will not cover you in the event of employment termination or if you are made redundant. It is designed to assist a policyholder in the event they cannot perform their job, due to illness or injury.  As part of the application process, each policy is assessed individually, taking pre-existing medical conditions into consideration. At time of implementation, the policy terms will outline what is covered and any exclusions that apply.



It is a common misconception that income protection insurance provided within superannuation is adequate in the event you are unable to work. While Income Protection, or Salary Continuance is included as a default in some superannuation funds, unless you have updated the sum insured to reflect your income, there will be a discrepancy between the amount you earn and the benefit you receive.

As an example, a common default sum insured is a $3,000 monthly benefit, which aligns with an annual salary of $48,000. The cover is usually limited to a 90-day waiting period with a 2-year benefit period. For someone who has not updated their sum insured to accurately reflect their income, relying on a superannuation fund for income protection can be extremely risky. It also highlights the importance of reviewing your policy to ensure you have the right cover in place.



Income Protection premiums are tax deductible when you pay them yourself via credit card or direct debit. Alternatively, to free up cashflow, the premium can be funded via your superannuation fund.   


With You All The Way

To find out more about income protection insurance and how it can be used to protect your financial wellbeing, feel free to reach out at any time.


Tyler Scarce

Risk Adviser



Learn about the Golden Rules for Purposeful Life Insurance Policies. 

Honing-In on Our Teams: Honan Life

Life Insurance

Simply put, to provide peace of mind to our clients. We provide personal insurance solutions to mitigate the economic loss in the event of death, disablement, or illness.



“We enjoy looking after our clients just as much as we enjoy looking out for each other. We are always willing to lend a hand to support one another and bring some fun to the workplace”.



The Honey Badgers – Tenacious, unrelenting, and persistent…on behalf of our clients!



  • Our transfer back to 100% Honan ownership – we’re home!
  • A number of successful claim results
  • Some great underwriting outcomes, resulting in favourable terms for our clients



Our process involves a collaborative approach from the entire team – without this we would not be able to achieve better outcomes for our clients. Our team all have quite different skill sets that we ensure are leveraged where necessary. We are honest enough to know there are areas where we require assistance, and we know we can depend on our colleagues to share their expertise.



Australian Rules football great, Leigh Matthews – exceptionally skilled, hugely determined, and courageous!



Continued collaboration across all parts of the Honan business. The opportunity to help even more clients and to provide them with the total Honan insurance solution is what motivates us!





Find out more about the golden rules of Life Insurance in this simple guide.



Read more about Honan Life Insurance here.

Lessons in Life Insurance: Golden rules for purposeful policies

Life Insurance

At a time when life feels less familiar than ever, it’s natural to seek ways to reduce uncertainty for ourselves and our loved ones. Life insurance is one way to do this. While many of us don’t think twice about insuring replaceable assets like our homes and cars, we’re a little less certain when it comes to our lives, income and health. Whether you’re new to life insurance, or keen to review the ‘fitness’ of your existing policy, here are some important points to consider:


What is life insurance?

A life insurance strategy (or portfolio) is designed to bridge a financial gap caused by an involuntary exit from the workforce due to medical diagnosis, injury, or death, from now through to retirement. A robust life insurance portfolio is a purpose-built one, with financial support tailored to your particular circumstances. A life insurance portfolio can consist of four products: Life (death), Total & Permanent Disability (TPD), Income Protection (salary continuance), and Trauma. In terms of funding certain life insurance premiums, there are options to do so through your superannuation, as a means to ease pressure on disposable income. Some life insurance products can also provide personal tax deductions.


How does it work?

Let’s take Income Protection as an example. Your ability to earn an income is your most important asset – something 2020 has reminded us about in spades. Living expenses continue even if your work does not. While Income Protection does not cover redundancy or termination, it does cover up to 75% of your income if you’re unable to work for a period of time due to injury or illness. Furthermore, personalising your Income Protection Insurance with an appropriate waiting period and benefit period means factors such as living expenses, financial objectives and salary are protected throughout a difficult time.


‘Set & forget’ = fraught with error

For Life Insurance in particular, a ‘set and forget’ approach to policy management is fraught with error. At Honan, our approach to Life Insurance (and indeed most insurance programs across the board), adheres to the following golden rules:

RULE 1: Review Regularly

When comparing life insurance strategies, consider a policy that’s tailored to your financial objectives and needs, with annual reviews to ensure ongoing appropriateness.

You want peace of mind that if something does happen, your insurance portfolio is truly ‘fit-for-purpose’ and ready to respond to your current personal circumstances (NOT your circumstances five years ago when the cover was implemented).

RULE 2: Bespoke is Best

Insurers have vastly different risk appetites imposed by reinsurers. At Honan, part of our policy-building process is to run a medical pre-assessment for all clients; matching their unique needs with a policy that fits. You may, for instance, require a medical loading to cover an existing condition, or a specific medical exclusion may apply due to previous injuries or illness. Designed with utmost confidentiality along the way, each policy will be built differently; reflecting your body mass index (BMI), smoking habits, pre-existing health conditions, and childhood/sporting surgeries. Again, these variables will change over time; thus the importance of Rule 1. Remember, previous medical history should NOT be a deterrent to seeking advice. The purpose of unpacking your personal history is not to discriminate, but to achieve a policy that is truly accurate and ‘ready to rescue’ in a time of need. At Honan, we assume the role of advisor – asking the right questions, answering yours, collating the data and achieving a policy prepared solely for your circumstances. 


We’re with you all the way

Honan Life is a specialised Life Insurance division within the Honan Group. Having unparalleled access to the market allows us to implement the right cover for our clients, with premium competitiveness and favourable medical terms.

To find out how Honan Life can support you and your family, please reach out at any time for a complimentary review of your existing portfolio, or to discuss new options available.


Tyler ScarcePersonal Risk Advisor

0439 813 124

COVID-19: Business Interruption, Contingency and Workplace Risk


On 30 January 2020, the World Health Organisation declared the Coronavirus outbreak a Public Health Emergency of International Concern. We sympathise with everyone who has been impacted by the virus and Honan Insurance Group have implemented additional resources and contingency planning to ensure that we remain able to provide advice, insurance and support to our clients as the situation develops.


As the impact of COVID-19 on local and international economies continues to evolve, we highlight to all clients the need for management to consider financial, strategic and business risks to operations. In this article, we examine the key areas we have received the most queries about: Property and Business Interruption, Business Contingency and Workplace Risk.


Industrial Special Risks* (Property and Business Interruption) Insurance & COVID-19 

(Potential Policy Response under ISR Mark IV Policy)

It is expected that many businesses will suffer disruption as a result of the spread of the Coronavirus (COVID-19).   With the situation changing rapidly and restrictions on the movement and gathering of people (both at local level and internationally), there is no doubt many companies will suffer from loss of revenue and/or additional expense.


Property Damage

Generally, property policies (including office risks) cover physical loss, destruction or damage to insured property resulting from a covered peril (all risks).  In the case of the Coronavirus, the ISR (Mark IV) policy exclusion 4(a) excludes physical loss destruction or damage occasioned by or happening through disease.  Office-related risks also have very similar exclusions. The ISR policy can include a myriad of endorsements with some coverage writebacks for costs to clean-up a site (where required by order of a public authority), however, this would need to be reviewed on a case by case basis.


Business Interruption

An ISR insurance policy extends to include under Section 2 coverage for business interruption.  This cover traditionally applies only to interruption caused by an insured material damage event such as fire, storm, impact or accidental damage.

In addition, cover is extended to include closure of the business by public authority for several risks including human infectious or contagious diseases.   This coverage was designed to cover events such as an outbreak of Legionnaires disease or measles which could affect one or two buildings and a small number of businesses.  Some ISR policies can extend to provide coverage for outbreaks in a 20-50km radius from the insured location.

Specifically, in relation to the COVID-19 outbreak, the ISR policy contains a specific exclusion for loss resulting from interruption of or interference directly or indirectly arising from or in connection with Highly Pathogenic Avian Influenza in Humans or any other diseases declared to be quarantinable diseases under the Quarantine Act 1908 and subsequent amendments.

Following the H5N1 virus (avian influenza) outbreak in 2006 and the H1N1 virus (swine influenza) outbreak in 2009, insurers adopted this exclusion as a market standard position in Australia.

The Australian Quarantine Act 1908 was replaced by the Biosecurity (Consequential Amendments and Transitional Provisions) Act in 2015.  COVID-19 was added to the Act as a listed (quarantinable) human disease on 21 January 2020, under Biosecurity (Listed Human Diseases) Amendment Determination 2020 (Cth) F2020L00037.


Listed Human Diseases under the Act are thus now:

  • Human influenza with pandemic potential
  • Plague
  • Severe acute respiratory syndrome (SARS)
  • Middle East respiratory syndrome
  • Smallpox
  • Viral haemorrhagic fevers
  • Yellow Fever
  • Human Coronavirus with pandemic potential

As a result of the above, the business interruption section of your insurance will not provide cover for COVID-19 disruptions. As with any other threat it is important to consider what risk management measures you can introduce to mitigate the risk to your staff, customers and business.


Risk Management Tips: How to avoid infection

Here is a short list of ways to minimise the spread of Coronavirus

  • Practice good personal hygiene.
  • Avoid contact with anyone with or suspected of having Coronavirus.
  • Boost your immune system by eating well, exercising, having enough sleep, and keeping your stress levels under control.
  • Cancel or delay any travel until the crisis is over.


Recommended Actions for your organisation:

  • Implement a home quarantine regime for anyone that has travelled to an infected country or is likely to have been in contact with someone infected with Coronavirus.
  • Review and update if necessary human resource (‘HR’) policies on fitness for work including possible quarantining of employees and formalising the requirement for employees to remain off work if affected.
  • Consider or extending flexible working arrangements to reduce the likelihood of the spread of the virus in the workplace or the community.
  • Update travel rules and arrangements limiting non-essential business travel.
  • If not already in place, provide sanitized hand washing stations for use by staff and visitors.
  • Review arrangements for workplace hygiene and cleaning protocols including “cough and sneeze” etiquette.
  • Protect the mental wellbeing of employees concerned about the Coronavirus.
  • Ensure clear and honest communication to employees on their welfare.


Keep Informed

Everyone should remain alert for updates and advice from the relevant authorities on additional steps to manage the spread of the disease. The health department in each state is providing excellent resources and advice and regular updates. Before travelling, check for and take the advice of any travel warnings on


Business Continuity Management Planning

A pandemic is just one risk facing modern organisations.   Having a fully documented and exercised business continuity management plan is important for every business.  Honan has resources to assist you in developing a business continuity plan and please speak to your Client Manager for further information.

*Property/Office/Business Interruption


Business Contingency

The Coronavirus may impact revenue for businesses through:

  • Production slowdown & disruption to workforce (sick or quarantined employees)
  • Disruption to Supply chains and supplier services
  • Decrease (or increase) in demand for stock
  • Large scale closures of consumer markets and public spaces due to quarantine
  • Delays in customers paying outstanding invoices within normal trading terms
  • Economic slowdown on global and local scale


Whilst there is coverage available under Corporate and Business Travel insurance policies in certain circumstances, there is limited cover available under most standard General Insurance policies for loss of trade and interruption to business operations.

As a general rule, it is not viable for most insurance markets and products to cover “global pandemics” as an insurable event. This is because the financial impacts of a pandemic are not quantifiable, meaning risk cannot be priced accurately or sustainably by insurers. If you do suffer a loss, please contact our team to discuss the specific circumstances and how your policy may respond.

Whilst insurance cover availability may be limited, businesses can prepare.  We would strongly recommend formation of a working committee to evaluate the impact to business as conditions continue to evolve, with accountability to the board or executive team.


Considerations for a COVID-19 working group should include:

  • Review of policies, procedures and protocols in place to protect the safety and wellbeing of employees and prevent further risk of spread of COVID-19 within the workforce and community.
  • Assess venerability of IT Infrastructure (including stress-testing) for an organisation’s ‘Work from Home’ capabilities in the event of premises closure/staff quarantine
  • Consider the impact on supplier and customer contracts to meet delivery/service obligations from both parties (how Contractual Penalties & Force Majeure clauses may be applied)
  • Evaluation of possible supply chain disruptions and how these can be mitigated or bypassed through appropriate work arounds and contingency planning
  • Evaluation and stress testing of stock levels and planning for inventory shortage as supply from China recommences operations
  • Review ability to support alternative revenue streams that are not as severely impacted by COVID-19
  • Review communications with key customers and other stakeholders to maintain relationships and manage challenges in a sensible, commercial & collaborative manner
  • Review credit and debt facilities to ensure that cash is available in the short term to manage financial impacts and support increased business restart
  • Communicate with creditors if a reduction in revenue has the potential to impact on cash flow and financial obligations.



Workplace Risk: Workers’ Compensation and Coronavirus (COVID-19)

There has been much discussion around the exposure and potential liability under Workers’ Compensation should an employee or contractor contract Coronavirus.

As outlined by Safe Work Australia (2020), Workers’ Compensation arrangements differ across schemes, however there are common threshold requirements that would apply in the case of COVID-19:

  • that the worker is covered by the scheme, either as an employee or a deemed worker
  • that they have an injury, illness or disease of a kind covered by the scheme, and
  • that their injury, illness or disease arose out of, or in the course of, their employment.

Compared to work-related injuries, it is difficult to prove that a disease was contracted in, or caused by particular employment. In the case of a virus such as COVID-19, establishing the time and place of contraction may become increasingly hard. We have sought clarity from our legal partners and obtained publications from the governing state regulators. Their view is it will be challenging to prove workplace exposure to Coronavirus as questions will arise as to the exact time and place of contraction.

For coverage to exist, a determining authority would need to be satisfied that the employment significantly contributed to the employee contracting the virus. For viruses, it can be difficult to accurately determine the exact time and place of transmission. As a result, it may be difficult to determine that employment significantly contributed to the virus.

However, where an employee’s employment puts them at greater risk of contracting the virus the significant contribution test may be easier to meet. For example, if the employment involves:

  • travel to an area with a known viral outbreak
  • activities that include engagement or interaction with people who have contracted the virus
  • activities that contravene Department of Health recommendations.

Each workplace illness would need to be considered on its individual merits, having regard to the individual circumstances and evidence in relation to the claim. More information is available here: Comcare Australia.

Deeming an illness or disease as work related and unique to the workplace may require court intervention to distinguish medical opinion from legal facts. There is no liability determination available to declare an illness or disease compensable or non-compensable; each case is determined on its own merits and circumstances.

Although you may not be able to eliminate the potential risk of employees contracting Coronavirus while carrying out work, you must do what is reasonably practicable to minimise the risk of employees contracting Coronavirus.


Coverage while travelling overseas for work

Any liability or workplace contribution applies to both employees working overseas and those working within Australia. Each case will be determined on its own merits and circumstances.

Note: For international employees engaged locally, state or country specific legislative conditions will apply. Queries should be directed to Honan. Depending on the state of urgency, travel restrictions and periods of self-isolation may need to be considered and communicated to all employees and contractors.


Employer Support

It is important that employers refer to internal policies and procedures to ensure measures for employee safety are in place. Honan has resources to actively advise on Workplace Risk exposure, as well as Legal and Work Health and Safety partners who can assist with ongoing management of this changing environment.


All companies will need to keep up to date in what is evolving environment.  Please see below some resources to do so:

Australian Government Department of Health

Safe Work Australia


McKinsey & Company have released a briefing paper (9th March 2020) which provides some insight into possible global economic impact as well as some common steps that can/need to be taken in preparation for businesses being affected and the formation of a working group: link here.

For any additional queries or concerns, please contact your Honan client manager.


*Property/Office/Business Interruption

The advice in this paper is general in nature. While the utmost care has been taken in the preparation of this preliminary advice or opinion, you use it at your own risk.

If you have difficulty reading and/or understanding the cover provided in the policy(ies) that you have please contact your Client Manager.

Honan Insurance Group & MBS Insurance partner in JV to improve life insurance solutions for clients

Life Insurance

Joint Media Release

Honan Insurance Group & MBS Insurance partner in JV to improve life insurance solutions for clients

Tuesday December 5 2017

Australian-owned insurance and financial services broker Honan Insurance Group CEO Damien Honan and leading risk specialist practice MBS Insurance partner Drew Burden have announced they have joined forces to create a new company Honan Life Insurance Group.

Launched yesterday, the new life insurance venture is an important step in Honan’s 53 year history of leveraging a broad network of specialists to bring relevant expertise to its clients.

Commenting further, Damien Honan said since the inception of the company over five decades ago, the group has operated to ensure clients are provided the very best insurance and financial solutions to address their needs.

“The alliance with MBS Insurance under the Honan Life Insurance Group gives us the ability to enhance our marketplace and client offering with a more inclusive integrated insurance service”, added Damien Honan.

Drew Burden said, “As a leading life insurance specialist, we are excited to be joining Honan Insurance Group under this new brand. Collectively we bring together the best of our respective organisations to create a new way to engage with clients and support them to protect their financial futures”.

Headquartered in Sydney, MBS Insurance was started in 2006. Over the years the practice has grown steadily through adherence to the highest standards of best practice and through its business infrastructure provides a comprehensive risk offering to clients.

Today, MBS Insurance is a highly regarded rapidly growing national risk specialist. The JV with Honan Insurance Group is both an important milestone and acknowledgement of the organisation’s standing in the financial advisory sector.

Australia is one of the most highly developed and fastest growing economies in the world underpinned by a financial services sector with an overwhelming volume of offerings and complexities between standalone insurance products and offerings inside superannuation funds.

“Through specialisation MBS Insurance has been very successful in this environment over a long time and the JV with Honan Insurance Group positions our brand as an industry leader with distinctive strengths”, Drew Burden said.

Honan Insurance Group has over 180 employees with offices in Melbourne, Sydney, Brisbane, Perth, New Zealand, Singapore and the US.  Evolving into a global organisation was achieved in November 2001 when the group became a member of the Worldwide Broker Network (WBN), the world’s largest network of independent property and casualty brokers and employee benefits consultants, giving Honan the capability to provide a truly integrated global service.

Over the years Honan’s partnership with the WBN has strengthened, with Honan solidifying their position as the Risk Partner of Choice in Australia and New Zealand, eventually encompassing the entire Asia Pacific region.

Damien Honan concluded, “Honan Life Insurance Group is on an exciting growth journey and this new alliance will provide a valuable point of difference for us as an organisation and increase the value we provide to our clients.”

Issued jointly by

Honan Insurance Group


MBS Insurance         


Media Enquiries:

Mr. Joe Perri

Joe Perri & Associates Pty Ltd

Telephone / fax:    +61 3 9324 0362

Mobile:                  +61 412 112 545


Health Coverage for Mobile Workforce

Employee Benefits

Mobile workers represent a growing part of the global workforce, with anticipation that the number of mobile workers will reach 1.3 billion by 2015.

With the expected growth, over the next decade and beyond, obtaining global health cover in light of worldwide political, economic and global uncertainty and instability has become imperative, say representatives from insurance providers RHI and Bupa.

As mobile workers can be based at faraway locations around the world, possibly working in dangerous terrains and politically uncertain environments, global health coverage is becoming an important component and attractive part of an employee benefit package. Health insurance provides employees with reassurance that should they need it, they have access to a quality medical facility even if they are in unfamiliar places.

In providing for healthcare needs of an international workforce, there are many options available for employers. Typical inclusions for global coverage is in-patient and out-patient cover, evacuation assistance, access to 24/7 days a week multi-lingual support and advice.

The coverage is much broader than standard travel insurance policies. When considering the appropriate type and level of cover, existing health conditions, the nature of the job people do and other factors have a bearing on the resulting solution for cover.

For more information on global health coverage refer to the following link or contact a qualified financial advisor:

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