General insurers achieved better financial results in the year to September 30, posting a 4.5% rise in net profit-after tax to $944 million on the back of rate rises in a number of product classes such as domestic motor and professional indemnity, prudential regulator data released today shows.

The higher premiums turbocharged the industry’s underwriting income 20% higher to $1.9 billion from a year earlier, the Australian Prudential Regulation Authority (APRA) says in its quarterly update.

“The [year to September 30] result was supported by improved underwriting results,” the regulator says.

“Within the underwriting results, insurers reported higher gross earned premium in most classes of business, including householders, domestic motor, fire & industrial special risk and professional indemnity.

“This reflects the increase in premium rates across these classes.”

However investment income remained subdued, falling 0.7% to $1.22 billion, with large increases in longer-term bond yields causing unrealised losses on interest bearing investments. The losses outweighed gains from equity investments over the year.

Frontier Advisors Principal Consultant Elie Saikaly says insurers have essentially produced inflation-like returns.

“Over the last 12 months to September 30, insurers delivered slightly lower investment income and unchanged return on net assets,” he told insuranceNEWS.com.au. “This is a reasonable result given how volatile investment markets were during the post-COVID market recovery.”

Gross earned premium during the 12-month period advanced 7.4% to $55.6 billion while gross incurred claims fell 0.9% to $42.8 billion.

APRA says lower claims costs were reported in the householder class, with the decline attributed to lower incidence of catastrophe events and the reinsurance classes of business.

But costs increased materially in the fire & industrial special risk class of business, reflecting moves by insurers to set aside “significant” provisions for business interruption claims in the December quarter last year.

Claims costs for domestic motor also went up during the period, notwithstanding lower levels of vehicle usage during COVID-19 lockdowns in the September quarter.

The APRA data is based on prudential filings from 93 insurers.

Direct insurers reported underwriting earnings of $1.59 billion and reinsurers $357 million during the period, up from $1.48 billion and $142 million a year earlier.

Houseowners/householders gross earned premium increased to $10.59 billion from $9.89 billion and gross incurred claims slid to $7.46 billion from $8.89 billion.

Domestic motor gross earned premium rose to $11.14 billion from $10.45 billion and gross incurred claims to $9 billion from $8.16 billion.

For the fire & industrial special risk line, gross earned premium improved to $6.24 billion from $5.46 billion and gross incurred claims worsened to $6.8 billion from $4.78 billion.

In the commercial motor vehicle class, gross earned premium climbed to $3 billion from $2.85 billion and gross incurred claims to $2.14 billion from $2.11 billion.

Professional indemnity gross earned premium improved to $3.06 billion from $2.46 billion and gross incurred claims worsened to $2.86 billion from $2.7 billion.

Public and product liability gross earned premium strengthened to $2.97 billion from $2.62 billion and gross incurred claims worsened slightly to $2.37 billion from $2.3 billion.