May 31, 2019
APRA has released life insurance statistics for the year to March 2019 which reveal a significant profit slump across the sector.
The Authority’s Quarterly Life Insurance Performance Statistics publication makes for sobering reading for life companies, where it reports risk products recorded a combined profit of $124 million for the March 2019 quarter.
Results by product:
- Individual Lump Sum Insurance: $334 million profit
- Individual Disability Income Insurance: $219 million loss
- Group Lump Sum Insurance: $59 million profit
- Group Disability Income Insurance $50 million loss
On a positive note, APRA’s commentary stated that profits for Individual Lump Sum insurance improved by $237 million over the quarter, caused by:
- Reductions in operating expenses
- The effective movement in net policy liabilities.
On the other hand, however, Individual DII continued to report losses. According to APRA, these losses were driven by:
- A significant reduction in discount rates
- Recognition of persistent adverse claims experience
For the 12 months to March 2019, APRA noted risk products reported an after-tax loss of $94 million, significantly down from a profit of $1.3 billion last year.
All risk products deteriorated, according to the regulator, particularly Individual Lump Sum and Individual DII. “This deterioration is mainly driven by loss recognition caused by persistent adverse claims experience,” noted APRA.