AMP’s life insurance earnings have suffered a blowout on income protection claims.

Its wealth protection division reported losses of $32 million in the five months to May 31, with $26 million from claims, of which about half were income protection. Lapses for the five months were $8 million.

The division’s after-tax profit for the six months to June 30 is forecast to be $54 million, down from $134 million in the corresponding period last year.

AMP says the life industry is under increased pressure. It expects volatile claims and lapses on its $1.7 billion of inforce premiums for the year.

“AMP anticipates some strengthening of best-estimate assumptions for income protection claims at the half-year, although the financial effects should be largely offset by future premium rate increases,” the company said in a statement to the stock exchange today.

It says AMP “continues to implement actions… aimed at improving its claims experience over time. This includes new claims management policies, earlier intervention strategies and enhanced support to help customers return to work more quickly.”

Half-year operating earnings are expected to drop to $395 million from $426 million.

AMP says underlying profit will be $425 million, down from $491 million.