The life insurance industry has copped a hammering as a result of the COVID-19 crisis and the continuing impact of regulatory reform, recording a more than 200 per cent decline in revenue over the first quarter of 2020.
APRA’s latest life insurance statistics revealed that life insurers had recorded a 209.9 per cent decline in revenue to minus $6.3 billion in the March quarter, down from $5.7 billion in the December 2019 quarter.
Net policy revenue had shrunk by 3.8 per cent over the same period from $3.8 billion to $3.6 billion, the regulator’s data showed.
APRA said the net loss recorded by the industry for the year to March 2020 was $1.8 billion, a “significant deterioration” from the $759 million profit recorded in the previous year.
The regulator said the industry’s performance had continued to worsen in the last quarter of 2019 and first quarter of 2020, as risk business had performed poorly, a sign of the continuing impact of commission reform in the sector.
“For the 12 months to March 2020, risk products reported a combined after-tax loss of $1.6 billion. All risk products deteriorated with the only exception being the individual lump sum product,” APRA said.
The regulator also pointed to continuing adverse claims experience in the income protection sector, with income protection products making an almost $1.4 billion loss in the year to March 2020, a 141 per cent decline from the previous year.
APRA’s data also revealed insurers’ investment revenue had taken a massive hit from the COVID-19 crisis, declining by almost 800 per cent between the December 2019 and March 2020 quarters.
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