Westpac’s BT Financial Group has seen insurance earnings drop $39 million in the first half due to claims from natural disasters.

The bank’s insurance cash earnings were down 28% to $75 million for the half year ending March 31, compared to $93 million for the corresponding six months in 2010.

Westpac CEO Gail Kelly says stronger investment earnings for the BT Group did offset losses from the insurance business.

“But insurance sales and premiums have also strengthened during the year from further cross-selling and expanding the distribution network for life insurance,” she said. 

Life insurance provided $55 million of earning in the 2011 first half, up 4%, compared to $46 million in 2010.

Lenders mortgage insurance earnings grew to $37 million in the half year, compared to $35 million in the corresponding 2010 half.

General insurance reported a $17 million loss this half due to severe event claims of $56 million.

In the 2010 half, severe weather claims were $3 million and the general insurance business reported positive earnings of $12 million.

The bank has been pushing cross-selling of insurance products within the Westpac group and BT has achieved significant growth with St George.

“BT insurance sales through St George showing significant improvement in home and contents insurance, with strong upside opportunity,” Ms Kelly said.

The cross-sell rates for St George home and contents were up 14% to 53% compared to the Westpac cross-sell rates of 76%.

The bank plans to expand its life insurance distribution using external financial advisers and further cross-selling within the bank, Ms Kelly says.