Industry rides on premium increases to eke out 0.3% profit rise
Industry rides on premium increases to eke out 0.3% profit rise
25 August 2022
General insurers in Australia managed to achieve a 0.3% rise in combined net profit after tax to $924 million in the year to June 30, as rate hikes across most product classes blunted the impact of the NSW/Queensland flood claims and investment losses, prudential data released today shows.
Gross earned premium rose 11.4% to $60.4 billion from a year earlier, the result of “larger increases” observed in householders, domestic motor and fire and industrial special risks (ISR), following higher underlying claims costs within these classes of business.
The Australian Prudential Regulation Authority (APRA) says the hardening rates improved the industry’s underwriting profit, which more than quadrupled to $6.3 billion from $1.5 billion in the previous corresponding period.
“Strong underwriting results for the year… were underpinned by increases in gross earned premium across most classes of business,” APRA said.
The NSW/Queensland floods and other “adverse” weather catastrophes during the period led gross incurred claims to increase 6.6% to $45.2 billion.
The householders and reinsurance classes of business recorded large rises in gross incurred claims, as did domestic and commercial motor lines, APRA says.
However public and product liability and professional indemnity reported “considerable” decreases in gross incurred claims.
The industry’s investment returns shrank due to unrealised losses on interest bearing investments, booking losses of $2.8 billion after making a $1.6 billion profit a year earlier.
On a quarterly basis, the industry achieved a $360 million profit for the three months to June, following a $400 million loss in the preceding quarter, while underwriting profit nearly doubled to $2.5 billion from $1.4 billion.
Gross earned premium gained 3.8% to $15.4 billion and gross incurred claims declined 36.3% to $9.8 billion.
