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29 November 2021
The general insurance industry returned better results in the year to September 30, with net profit after tax rising 4.5% to $944 million from a year earlier, according to the latest prudential data.
Rate rises in a number of product classes such as domestic motor pushed underwriting income 20% higher to $1.9 billion, the Australian Prudential Regulation Authority (APRA) says in its quarterly update.
“The [year to September 30] result was supported by improved underwriting results,” the regulator said.
“Within the underwriting results, insurers reported higher gross earned premium in most classes of business, including householders, domestic motor, fire & industrial special risk and professional indemnity.
“This reflects the increase in premium rates across these classes.”
Investment income however remained subdued, falling 0.7% to $1.22 billion, with large increases in longer-term bond yields causing unrealised losses on interest bearing investments. The losses outweighed gains from equity investments over the year.
The APRA data, based on prudential filings from 93 insurers, show gross earned premium during the 12-month period advanced 7.4% to $55.6 billion while gross incurred claims fell 0.9% to $42.8 billion.
APRA says lower claims costs were reported in the householder class, with the decline attributed to lower incidence of catastrophe events and the reinsurance classes of business.
But costs increased materially in the fire & industrial special risk class of business, reflecting moves by insurers to set aside “significant” provisions for business interruption claims in the December quarter last year.
Claims costs for domestic motor also went up during the period, notwithstanding lower levels of vehicle usage during COVID-19 lockdowns in the September quarter.
On a quarterly basis, the industry’s net profit surged 19.5% to $846 million in the three months to September from the preceding period.
Underwriting earnings went up 69% to $1.5 billion.