APRA data confirms difficult 2020 for life insurance

The full challenge of the circumstances facing the Australian life insurance industry, including with respect to group insurance, has been laid bare in the latest Australian Prudential Regulation Authority (APRA) data.

The APRA data covering the 2020 calendar year revealed that the industry had marginally improved its position over a difficult 2019 but was still in negative territory.

It said the industry had reported a net loss of $0.1 billion ($0.3 billion loss for the year to December 2019) and a return on net assets of -0.4% (-1.2% for the year to December 2019).

“Total revenue dropped significantly as a result of the market volatility impacts of COVID-19, which led to an investment loss of $2.3 billion for the year to December 2020 ($24.6 billion profit for the year to December 2019),” the APRA analysis said.

“However, this was mostly offset by a reduction in expenses, primarily due to release of investment and claims reserves of $25.4 billion throughout the year.”

It said that within risk products, individual lump sum was the only category reporting a profit in the 12 months to December 2020.

“Individual disability income insurance (IDII) recorded a loss of $0.7 billion during the year, which is a $0.7 billion improvement in comparison to the previous year’s result,” the APRA analysis said.

The regulator said results for group lump sum and group DII had also improved this year; “however, both products continued to record losses of $173.5 million and $122.5 million respectively”

Further, it said the improvements across IDII, group LS, and group DII were primarily driven by release of reserves for each product throughout the year.

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