Individual disability income insurance (DII) made more than $1 billion in net profit for the year to June 30, reinforcing hopes the troubled line is on the mend after the Australian Prudential Regulation Authority (APRA) took action, including capital measures, to force providers to improve product pricing and design.

Latest APRA data shows individual DII recorded net profit of $1.14 billion in the 2021/22 year, recovering from a $345.3 million loss in the prior 12-month period.

The earnings recovery is a significant improvement as well from the $723.2 million profit posted in the year to March.

“The improved individual DII result can be attributed to the continued reserve releases throughout the year in light of improved claims assumptions,” APRA says. “This reflects actions taken by insurers to address sustainability concerns and enhance long-term customer outcomes.”

APRA says individual DII’s results helped risk products to book a combined net profit of $1.2 billion for the year, following a previous $18 million loss.

Group lump sum is the only product out of the four risk offerings in the red, widening its net loss to $121.5 million from $70.5 million.

Group DII made $76 million in net profit after losing $5.6 million in the preceding year and individual lump sum earned $89.5 million, down sharply from $403.3 million.

The life industry’s overall net profit shrank 51.6% to about $500 million, hit by an investment loss of $6.3 billion, APRA says. The investment deficit is a result of unrealised losses on interest bearing assets.

Industry-wide net policy revenue rose 0.8% to $14.7 billion and net policy expenses fell 1.7% to $9.2 billion.