The Australian Prudential Regulation Authority (APRA) today released its Quarterly Life Insurance Performance Statistics publication for the March 2021.
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“Profitability of risk products has substantially declined in recent years. The net profit margin for 2019-20 was negative 10%, considerably below the longer-term average of around 3%.”
The APRA analysis confirmed that the result was driven largely by continued substantial losses in individual disability income insurance (IDII) and further declines in the profitability of individual lump sum and group business.
“Despite incremental premium rate increases in IDII in recent years, the combined effects of persistent adverse claims experience and the need to strengthen reserves contributed to the poor result,” it said.
“The profitability of group lump sum and group disability income insurance also declined during 2019-20. However, it should be noted that on an insurer-by-insurer level (as opposed to an industry aggregate level), profitability can be lumpy, with downward movements driven by the timing of insurers changing their assumptions about risk and the pricing of poli