Life insurance has become the bad boy of the financial services industry, with declining revenues, higher claims and many policyholders not renewing.

In their latest round of results, the major life insurers do not deny there are problems, especially in claims and lapse rates.

But things may not be as bad as they seem, with some poor results seemingly due to management inertia in areas such as claims and lapse rates.

AMP, Suncorp Life, ClearView, CommInsure and TAL all report inforce annual premium growth, ranging from 4-38%.

And the latest Australian Prudential Regulation Authority (APRA) figures show industry premium of $47.2 billion last year, up from $42.1 billion in 2012.

Based on this snapshot, life insurers are earning more from premiums, so why the gloomy outlook?

The answer seems to be claims management, which has failed in the past few years. Or was the growing number of claims ignored until it became a crisis?

AMP admits total claims blew out to $49 million last year from $14 million in 2012.

CommInsure has not issued claims figures but acknowledges a “slight deterioration in life claims”, while Suncorp says disability claims cost $10 million in its half-year result.

APRA reports a moderate rise in claims, with the industry totalling $44.2 billion last year compared with $43.1 billion in 2012.

Then there is the growth in lapse rates, which is becoming better known as the industry opens up on the topic.

ClearView says lapses cost it $100,000, while AMP says they grew 1% last year to 14.8%.

Suncorp puts lapses at $17 million, while CommInsure says it has improved lapse rates thanks to retention initiatives.

So, despite rising claims and lapse rates, do life insurers make money?

The simple answer is yes, but less than in previous years.

Suncorp’s life business result was down 49%, with TAL falling 14% and AMP down 9%. However, ClearView’s after-tax profit on life insurance grew 18% and CommInsure was up 4%.

With some insurers reporting better results, has the life industry turned the corner on the way to becoming more profitable?

In some ways it is like a super-tanker that takes many kilometres to turn: the industry’s initiatives will take some years to filter through to the bottom line.

Financial services group CEOs must maintain a close eye on their life businesses, to make sure the changes improve profitability – and to stop the gloomy headlines.