Australia’s general insurance industry takes hit to net profit in Q1

According to the data, the Australian general insurance industry saw a net profit after tax of $-0.4 billion during Q1 FY22, down from $0.1 billion during the December quarter of 2021 (Q4 FY21). It also reported a return on assets of -5.7% during the same period, down from 1.4% in Q4 FY21. Meanwhile, the general insurance industry’s gross earned premium totalled $14.9 billion during Q1 FY22, down from $15.6 billion during the previous quarter.

Read more: APRA and ASIC release latest life insurance claims and dispute figures

APRA also found that the Australian insurance industry’s gross incurred claims jumped to $15.4 billion during Q1 FY22 from only $10.5 billion during Q4 FY21 due to the catastrophic flooding in southeast Queensland and New South Wales (NSW) from late February to March 2022. It also found significant increases in gross incurred claims costs in the householders and reinsurance lines of business, as well as domestic and commercial motor lines of business – reflecting higher levels of motor vehicle usage in the current year when compared to the previous year.

For the full-year FY22, the Australian general insurance industry reported a net profit after tax of $1.3 billion, up from $1.1 billion in the year ended March 21, 2021 (FY21). APRA explained that the increase in net profit after tax was driven by stronger underwriting results for the year. However, it was partially offset by significant investment losses. The general insurance industry also saw a return on net assets of 4.3% during FY22, up from 3.9% during FY21.

Meanwhile, the report revealed that the general insurance industry’s gross earned premium totalled $58.9 billion during FY22, a jump from $53.0 billion during FY21. It further revealed that insurers reported increases in gross earned premium in most lines of business, reflecting increased premium rates. Additionally, APRA noticed more significant increases in gross earned premium in householders, domestic motor, fire and industrial special risks (ISR) public and product liability, and professional indemnity (PI) lines of business.