Rising claims expenses have impacted on profitability in the local general insurance industry, with net profit plummeting by more than 40% for the year ending June 30, according to APRA.

The quarterly general insurance performance report reveals the industry banked $3 billion in net profit, down from $5.2 billion the previous year. Insurers accounted for $2.5 billion (84%) of the industry profit.  

The regulator’s report shows a 17% hike in net incurred claims to $14.7 billion, with insurers paying $14.1 billion in claims.

Net premium revenue also rose 3% to $22.8 billion.

The industry’s net loss ratio increased more than  7 percentage points to 65%, while the underwriting expense ratio was up slightly to 28%.    

The underwriting surplus dropped by almost 49% to $1.8 billion, also resulting from the upsurge in claims expenses.

At the end of the period the industry held total assets of $91 billion, increasing less than 1% from the previous year. These assets were offset by a 1% increase in liabilities to $65.3 billion.

Industry net profit subsequently decreased by 1% to $25.8 billion.