NSW police insurance scheme ends lump sum payments for TPD

25 Sep 2024

Starting 1 October 2024, police insurance arrangements in NSW are changing. Police Blue Ribbon Insurance (PBRI) is being replaced by the Enhanced Police Support Scheme (EPSS), which introduces changes to Total and Permanent Disablement (TPD) coverage for officers.

What is Total and Permanent Disability (TPD) insurance?

TPD insurance is often included as default cover in superannuation funds. It was provided to NSW police officers as part of PBRI coverage through Aware Super, with benefits for terminal illness, death, total and permanent disablement (TPD), and income protection.

TPD offers financial protection if you become permanently disabled and cannot work in your usual or any qualified occupation. TPD benefits are typically paid as a lump sum to manage life changes due to permanent disability, covering things such as medical expenses, rehabilitation, home modifications and living costs.

Police insurance for TPD provides financial support in the case of career-ending injuries or illnesses of officers, who face higher physical and mental health risks in their job. These include the occurrence of PTSD, anxiety and other mental health related conditions.

Rationale for replacing police insurance scheme

The NSW government says the EPSS will better support NSW police officers who are injured at work, and put an end to “one of the most financially complex, onerous and unfair imposts imposed on NSW police for the past decade”. (Please see A better, fairer system to support NSW Police.)

The EPSS aims to offer improved off-duty support benefits for injured NSW police officers, whether their injuries occur on or off duty, and to streamline the claims process by eliminating the need to deal with multiple providers. (Please see NSW Police Force announce improved insurance and support scheme for officers.)

The EPSS also addresses the superannuation concessional cap issue. (Please see EPSS – FAQs.)

Under PBRI, NSW police insurance premiums were paid by the government, with a small contribution from officers, equal to 1.8% of the officer’s salary. This inflated their reported income, leading to the loss of various means-tested benefits, higher tax bills and restrictions on additional super contributions.

This rise caused officers to breach income thresholds, affecting their eligibility for benefits like health rebates, childcare rebates, family tax benefits and fair child support assessments.

However, officers should be aware of the changes to TPD coverage under the new police insurance scheme, which some argue will leave them worse off.

Lump sum payments for TPD to cease under EPSS

Starting 1 October 2024, Aware Super will no longer manage TPD claims for police officers, ending the traditional lump sum payments. Instead, the NSW Police Force will handle everything on its own under a self-managed model. (Please see Permanent solution to Concessional Cap issue, improvements to Police Blue Ribbon Insurance (PBRI).)

Under the new EPSS, instead of a TPD lump sum payment, officers will receive weekly workers’ compensation, as well as supplementary support payments for up to seven years for eligible officers who are injured on duty, with the possibility of extension of up to an additional three years in cases of catastrophic exceptional circumstances.

This move, from a one-time lump sum of standard TPD cover to ongoing support, is a significant shift in financial assistance for injured officers.

While income protection is currently capped at seven years at 75% of salary under PBRI, under the EPSS officers who are assessed as permanently incapacitated or catastrophically injured at the end of this seven-year period may be eligible for income protection payments to continue for another three years at the same rate (75% of salary).

In order to receive the additional three years of income protection payments under the EPSS, the officer will need to pass an “exceptional payment test”, convincing an independent panel of nominees from the NSW Police Force, the Police Association of NSW and the Police Minister that they are medically incapable of returning to any duty within the force.

All on-duty and off-duty death benefits remain unchanged.

How will these changes affect existing TPD claims under PBRI?

Existing TPD claims under PBRI will remain unaffected.

Officers who stopped working due to illness or injury before 1 October 2024 can still submit their TPD claims to Aware Super for assessment, provided they have received medical certification confirming that their illness or injury caused total and permanent disability.

TPD cover is available to officers until 1 October 2024, when the EPSS commences. Officers considering making a claim should contact an experienced TPD lawyer immediately.

Can police officers still purchase TPD insurance?

With the cessation of TPD insurance under the EPSS, NSW police officers might consider purchasing TPD insurance separately from an insurer or financial institution.

This cover can be bought alone or with life insurance, potentially leading to extra costs for officers.

Deciding whether to purchase TPD insurance involves considering factors such as potential disability costs, occupation risk level, affordability, adequate coverage levels and policy details.

Chris Clarke

Chris is a Senior Solicitor at the Stacks office in Tweed Heads and an Accredited Specialist in Personal Injury by the Law Society of NSW. He was admitted as a lawyer in 1994. Chris has worked principally in New South Wales and Queensland personal injury litigation, both on the Gold Coast and in Newcastle. His work has mainly involved work injury damages claims, motor vehicle accident claims and occupiers liability claims in both states. He has negotiated thousands of claims for personal injury over the last 25+ years of legal practice. He has worked on cases involving traumatic brain injury, amputation and serious spinal injury. In many cases he has advised and represented police officers, paramedics and fire brigade personnel who have suffered physical and psychiatric injury during the course of employment. As a WIRO accredited solicitor through the ILARS scheme, Chris is able to represent injured workers in NSW at the commission level, which is a prerequisite to pursuing a work injury damages claim under NSW law. Chris advises his clients on the correct regime of treatment to be implemented early, so as to achieve early stabilisation of the injuries and bring about an early resolution of the claim if possible. Chris believes that lawyers need to be proactive in keeping up to date with the scope of legislative change in NSW and how it affects the claims of each and every one of their clients. Chris knows the tactics of navigating a complex and often restrictive system, which is changing constantly. Chris has a Bachelor of Arts degree majoring in Earth Sciences in addition to his legal qualifications. When he completed his specialist accreditation course in 2004, his mock file and exam results were disseminated afterwards to other candidates as a model of excellence for subsequent course participants. Chris has a down-to-earth attitude and is approachable and helpful. He treats his clients with empathy and understanding, noting that dealing with insurance companies often takes its toll on injured claimants. Because he has a detailed and expert knowledge of the system built up over nearly 30 years of practice, his clients are well advised as to their prospects in any given claim and how to maximise their damages award. When not at work, Chris likes to spend as much time as he can with his 11-year-old daughter, who lives in Coffs Harbour. He enjoys spending time with his family, going to the beach and playing guitar. Chris is a member of St Joseph's Parish at Tweed Heads.

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