The underlying profit of New Zealand insurer Fidelity Life has fallen to $NZ13.6 million ($12.73 million) from $NZ19.2 million ($17.97 million) last year, amid a multi-million dollar increase in net claims.

An industry-wide trend of increasing claims cost Fidelity $NZ8.3 million ($7.77 million) this year in extra net claims expenses, according to its annual results. Net claims now sit at $NZ42.91 million ($40.16 million).

Income protection claims are behind the trend, as policyholders age and cancer and mental illness become more prevalent. Accepted income protection claims grew 21% compared to last year.

Restructuring costs and the insurer’s response to the regulator’s review of conduct and culture also affected profits, it says.

Net premium revenue grew $NZ8.2 million ($7.68 million) to $NZ150.3 million ($140.68 million). Group risk inflows increased but the retail channel was down, reflecting a flat adviser market.

The company says the market remains highly competitive, with life insurers still enhancing products and sharpening pricing. Fidelity Life holds an 11.4% market share.