The life insurance industry has continued to take a hit to profit, with risk products reporting significant losses.
The Australian Prudential Regulation Authority’s (APRA) latest quarterly life insurance performance statistics paint a bleak picture with net profit after tax down 95.6% to $18 million while total revenue down 27.4% in the September quarter.
The results are worse year on year with net profit after tax down $1.6 billion down from $220 million the previous year while total revenue plummeted 63% to $12.9 billion.
APRA said the life insurance industry’s performance continues to be challenged.
“This deterioration was caused by poor results in both the December and March quarters,” the prudential regulator said.
Risk products reported a $216 million loss over the quarter with a $318 million loss to individual disability income insurance partially offset by a $35.5 million net profit in group disability income insurance and $162.9 million profit in individual lump sum.
However, year on year risk products reported a combined after-tax loss of $1.5 billion with $1.1 billion in losses to disability income insurance.
In September the regulator resumed its intervention to assist the struggling industry as it said it has seen the industry lose $3.4 billion in five years.
From October 1, individual disability income insurance providers have been subject to upfront capital penalties until APRA is assured they have addressed its concerns about the sustainability of the products.
Providers will also be required to make sure benefits to not exceed policyholders’ incomes at the time of claim and cease the sale of agreed value policies.
In addition, providers also must avoid policies with fixed terms and conditions of more than five years and ensure effective controls are in place to manage the risks associated with longer benefit periods.
Source: Google | Insurance News