APRA’s Quarterly Life Insurance Performance Statistics reveal total revenue was $23.7 billion, which was 35.7 per cent lower than in the previous 12 months.
This was mainly driven by a reduction in investment revenue from $17.6 billion to $2.1 billion, which significantly exceeded the $637 million increase in gross policy revenue.
For the 12 months to December 2018, total industry net profit after tax was $593 million, down from $2.6 billion for the 12 months to December 2017.
Risk products contributed a much lower proportion of total profits, just $92 million, down from $1.4 billion in 2017.
All risk products deteriorated, particularly individual lump sum and individual disability income insurance.
“This deterioration is mainly driven by an increase in the effective movement in net policy liabilities in individual risk products, resulting from a recognition of capitalised losses caused by persistent adverse claims experience, which exceeded an increase in revenue,” APRA said.
By quarter, the life insurance industry reported an after-tax loss of $519 million for December 2018, significantly down from a profit of $189 million for September.
“The main drivers of this loss were the adverse movements in financial markets during the December quarter (e.g. a 9.0 percent fall in the ASX 200), which negatively impacted life insurers’ investment revenue, along with an increase in expenses caused by a discrete write-off of goodwill for one insurer,” APRA said.
“Next to the write-off, individual risk products comprised the bulk of this loss, continuing the negative trend seen in the preceding four quarters. The largest drop in profits was in individual lump sum (from a profit of $111 million to a profit of $10 million), caused by reductions in both net policy revenue and investment revenue, as well as an increase in tax outlays.”
The revenue is up because the premiums are going through the roof.
Tip of the iceberg.
Once the experienced risk insurance advisers have been killed off…the claims will still keep coming and the quality risk business inflows will dry up.
[i]APRA’s Quarterly Life Insurance Performance Statistics reveal total revenue was $23.7 billion, which was 35.7 per cent lower than in the previous 12 months.[/i]
We told you so…
[i]For the 12 months to December 2018, total industry net profit after tax was $593 million, down from $2.6 billion for the 12 months to December 2017.[/i]
$2.6 billion profit??? Thought they were all going broke, hence the ridiculous increases in our and our clients premiums!
[i]All risk products deteriorated, particularly individual lump sum and individual disability income insurance.[/i] Can’t wait to see the marketing strategy once this deteriorates even further – just like we ALL warned them…
I really feel that the wheel will be re-invented, after all this BS we will go back to the original model due to the losses outlined in the article. Its called commercialization, if the insurance companies lose their distribution force and in turn, a lot of their NON PAID admin (which is what we do to help clients) then just watch what happens when claims go through the roof with only bank tellers to help them.
Exactly Stephen, It’s like the RC assume that the billions of dollars in commissions just goes to me as a financial adviser. A typical $2,000 commission to get new business on the books goes to Licencee Fee, Rent, Insurance, Admin Staff…if there is anything left I can get paid for my work. Ongoing commissions not only pay for ongoing advice, they pay for my staff to be able to assist the insurers retain their cover and more importantly assist the clients at claim time and be an advocate.