AMP’s life insurance business is under pressure, with rising claims and falling profits painting a sorry picture in its June half-year result.

Income protection claims blew out to a $23 million loss from an $8 million loss in the corresponding period last year.

It was a similar story with lump sum claims, moving to a $13 million loss from a $2 million profit.

Group life claims increased to $5 million from $1 million, which is attributed to one policy.

The good news for AMP is losses on lapses improved to $2 million from $7 million.

Individual annual inforce premium grew $11 million to $1.49 billion for the half-year. The increase is attributed to consumer price index rises, not increased sales.

Group life annual inforce premium was down $2 million to $440 million.   

AMP Life also suffered a 53% fall in operating earnings to $47 million.

The bad news on claims and sales resulted in a 45% after-tax profit drop to $68 million.

CEO Craig Meller admits the insurer has problems with claims.

“While first-half claims experience was poor, we continue to focus on improving the outcomes for customers in our wealth protection business,” he said.

“Actions are under way to improve capital efficiency and reduce volatility.”

Among the actions outlined by Mr Meller are repricing income protection and group policies to deliver value over volume.

AMP has also appointed new claims management personnel, including more assessors, and is undertaking more data analytics.

The life business hopes to reduce income protection losses by $10 million in the second half, while lump sum markets remain challenging, Mr Meller says.

Improvements in group life performance are not expected until next year.

“To address performance in the insurance business AMP is strengthening income protection assumptions, repricing, continuing the transformation of claims management and accelerating our capital management initiatives,” Mr Meller said.