ClearView Wealth has reported a “disappointing” second half, with income protection claims battering its life insurance business.

The insurer’s life insurance net profit fell 39% to $7.5 million during the six months to December 31.

Claims losses of $4.7 million during the half mainly stemmed from the income protection portfolio. This was compounded by a loss of $1.4 million from policy lapse, which have triggered a focus on retention strategies.

“Amidst extremely challenging market conditions, ClearView remains focused on further improving lapse performance, expanding its distribution footprint and addressing the fundamental issues with income protection products,” the company says.

It is now conducting a comprehensive review of the ClearView LifeSolutions income protection product series to improve product design and pricing. It has started to implement early intervention techniques to improve claims outcomes, improving rates of return to work, and optimising claims case management resources.

ClearView is also reviewing claim assumptions after new business premiums dropped by more than a third in the half, as well as working with its reinsurer on more sustainable products and pricing.

In a business update to the Australian Stock Exchange last month, ClearView accused competitors of engaging in ‘honeymoon’ discounting to maintain market share and said it will stop selling agreed-value income protection from March 12.

ClearView is advanced in plans to launch a new indemnity-type option with a lower maximum monthly benefit at a lower premium.