Life insurers report another profitable quarter

The life insurance industry appears to have moved past its loss-making years, reporting a $332 million profit at the end of March, new APRA figures show.

About $5.7 billion was generated in insurance revenue, marking a 3% rise from the December 2024 quarter.

Life insurers managed to turn the $15 million after-tax loss into $332 million in net profit, partly driven by positive insurance service results, of which includes a bump in changes to liabilities for incurred claims of $475 million.

Across different products, individual disability income insurance (IDII), at the superannuation and ordinary business level, made $1.1 billion in revenues in the March quarter, holding steady on a quarterly basis and year on year.

Group disability income insurance made $697 million in revenues for the period.

Meanwhile, group lump sum risk made $1.4 billion in revenues, up 8% quarter on quarter. Individual lump sum risk, which earned $2.2 billion, was stable over the quarter and much of the past 12 months.

About five years ago, APRA feared for the viability of some life insurance products, namely IDII for accumulating losses of more than $3 billion at the time.

APRA's intervention into loss-making IDII products helped curb a disastrous outcome that ultimately led to turnaround in 2022.

In a statement to Financial Standard, APRA recently said that it continues to monitor developments around IDII but does not have any specific commentary on this.

As of late, claims handling has been a major, systemic issue for superannuation funds and insurers.

The Australian Financial Complaints Authority's (AFCA) latest Systemic Issues Insights Report found the claims-handling process is tarred by delays, miscommunication, and inconsistent decision-making in claims.

Inadequate resourcing and staff levels to deal with the volume of claims received in the industry, especially following natural disasters when claim volumes increase, has contributed to delays in processing and the quality of assessing claims, AFCA said.

In the 2024 financial year, AFCA received 1468 complaints about income protection insurance or IDII in total during 2023-24. Of those, 938 related to group superannuation and 530 came from retail insurance.

Delays in claim handling was the top issue in both retail and group income protection insurance.

Delays accounted for 27% of all received income protection complaints for superannuation and 22% for retail insurance complaints.