Suncorp has blamed lower life insurance profits on lapses due to tough economic conditions – a problem it says affects the entire industry.

The life division’s net profit after tax for the six months to December 31 was $51 million, down from $133 million in the previous corresponding period.

Negative lapse experience was $17 million as economic conditions cut life insurance affordability and customer retention, Suncorp says.

The division’s embedded value fell 7% to $2.4 billion because of a material change in lapse assumptions.

“A prolonged period of economic uncertainty continues to impact consumer confidence and is having a material impact on the life insurance industry,” Suncorp told the Australian Securities Exchange.

Although lapses remain an industry-wide problem, the group has improved customer analytics and claims management to address the issue, CFO John Nesbitt says.

“We are shaping this business up for growth and, as market conditions improve, it will emerge as the growth story for the group,” he told an investor briefing last week.

It comes as AMP also reported poor lapse rates and claims experience in its full-year results last week.

Suncorp Life’s risk new business grew 18.2% in the six months as it targeted sales among the group’s general insurance (GI) customers and experienced strong momentum from independent financial advisers.

Inforce growth rose 6.6%. Individual risk premiums were $739 million and funds under administration were $7.2 billion.

Independent financial advisers brought in $35 million of new life business, up 17%; direct grew $16 million, with 70% of sales made to group customers through the GI brands; and New Zealand new business grew 29%, or $9 million, after a relaunch of the product offering.

The life division says the market remains challenging. It will continue to unlock the value of the group’s customer base and focus on managing experience and costs.

Suncorp Group reported a 48% increase in net profit to $574 million.