{"id":51891,"date":"2020-09-01T12:33:43","date_gmt":"2020-09-01T02:33:43","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=51891"},"modified":"2020-09-07T14:05:58","modified_gmt":"2020-09-07T04:05:58","slug":"performance-of-risk-products-deteriorates-apra","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2020\/09\/01\/performance-of-risk-products-deteriorates-apra\/","title":{"rendered":"Performance of Risk Products Deteriorates – APRA"},"content":{"rendered":"

Risk products reported a combined after-tax loss of $1.4 billion, for the 12 months to June 2020, APRA\u2019s Quarterly Life Insurance Performance Statistics<\/em> for the June quarter show.<\/p>\n

A statement from the authority says that within risk products, Individual Lump Sum (LS) is the only category reporting a profit in the 12 months to June 2020.<\/p>\n

\u201cIndividual Disability Income Insurance (DII) has made a substantial loss of $1.2 billion during the year, primarily driven by reserve strengthening as adverse claims experience persists. Group LS and DII have also deteriorated this year reporting a $353 million and $249 million loss respectively,\u201d APRA says in its ‘highlights’ analysis of the statistics.<\/p>\n

It says that for the year to June 2020, the industry has reported a significant net loss after tax of $1.6 billion ($0.4 billion profit June 2019) and a return on net assets of -6.4 percent (1.8 percent June 2019).<\/p>\n

APRA says the deterioration was caused by the persistent poor performance of risk business\u00a0 during the year and large falls in investment revenue mainly from the market volatility impacts of Covid-19 in the March 2020 quarter.<\/p>\n

However in the June quarter, the industry has reported a profit of $423 million \u201c\u2026 a significant improvement from the two previous periods. This was primarily driven by the pick-up of investment revenue as investment market volatility lessened, as well as the favourable performance of Individual LS risk business\u201d.<\/p>\n

Another gloomy quarter of losses for IP results<\/strong><\/p>\n

Meanwhile, the FSC says in a statement that the release of APRA\u2019s quarterly life insurance financial performance statistics, reveals another gloomy quarter of losses for income protection results.<\/p>\n

\"\"<\/a>
Nick Kirwan …income protection losses were driven by a surge in the number and duration of claims …<\/figcaption><\/figure>\n

FSC Senior Policy Manager for Life Insurance Nick Kirwan<\/strong> says the [quarterly] results continue to be dominated by higher than expected claims for individual income protection insurance (IP), “…which saw a net loss after tax of $179 million in this product alone, wiping out almost all the profit from other individual product lines.<\/p>\n

\u201cThese income protection losses were driven by a surge in the number and duration of claims, especially for mental health conditions. We expect mental health claims to increase in the months and years ahead from the effects of the Covid-19 pandemic on the economy, exacerbating people\u2019s isolation and financial hardship.”<\/p>\n

He noted that overall, during 2019 life insurance companies paid out $12 billion saying the flip-side of that coin is that these increasing claims are the reason why many Australian households will have noticed increases in their life insurance premiums.<\/p>\n

… life insurers must balance the books and remain sustainable …<\/p><\/blockquote>\n

\u201c We know premium increases are never welcome, but like any business, life insurers must balance the books and remain sustainable. Premiums coming in must cover the cost of the claims going out.”<\/p>\n

He says that looking further ahead, most life insurance companies are busily developing a new generation of simpler, more sustainable income protection policies that focus on covering core needs. These new policies will give customers more choice, and will be all about the three A\u2019s: Availability, Affordability and the Assurance that your life insurance company will be there when needed.<\/p>\n

\"\"<\/a>
Courtesy of APRA.<\/figcaption><\/figure>\n","protected":false},"excerpt":{"rendered":"

Risk products reported a combined after-tax loss of $1.4 billion, for the 12 months to June 2020, APRA\u2019s Quarterly Life Insurance Performance Statistics for the June quarter show. A statement from the authority says that within risk products, Individual Lump Sum (LS) is the only category reporting a profit in the 12 months to June […]<\/p>\n","protected":false},"author":24,"featured_media":51899,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-51891","post","type-post","status-publish","format-standard","has-post-thumbnail","category-general"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/51891","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/24"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=51891"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/51891\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/51899"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=51891"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=51891"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=51891"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}