Westpac’s decision to abandon the financial advice sector has caused a 4% drop in cash earnings from reduced life insurance premiums and higher insurance claims.

Its full-year results show life income dropped from $145 million in the first half of the year to $94 million in the second half. Life insurance in-force premiums now stand at $1.21 billion in the second half, compared to $1.28 billion at the same time last year.

Retail life in-force premiums dropped from $994 million in the second half of 2018 to $960 million in the second half of this year, while group life in-force premiums have dropped from $283 million to $252 million. Insurance claims rates have risen from 42% to 53% between the second half of 2018 and now.

The cash earnings result excludes the cost of remediating customers for bad financial advice and resetting its wealth business. Westpac rolled BT Financial into the consumer and business divisions earlier this year, taking only a portion of its existing advisers with it.

It expects to save about $200 million from the reset of its wealth division, including its exit from financial advice. Westpac will partly use that money on incremental risk management improvements over the next two years, Westpac CEO Brian Hartzer says.

The company has paid out $350 million in refunds to more than 500,000 customers since 2017.

Ratings agency S&P Global says Westpac’s decision to sell its financial advice arm – the main distribution channel for its life insurance – and the decision by the other major banks to exit life insurance has raised the chances that it will also “sell or otherwise exit” the life sector.