The total net profit of the general insurance sector in Australia fell by more than 40% in the year ending 31 March 2016 – down from $3.8bn to $2.2bn, according to the latest stats released by APRA.
The prudential regulator released its Quarterly General Insurance Performance Statistics last week, with the drop in profits largely driven by a fall in investment incomes and an increase in the level of reinsurance purchased by insurers.
Investment income, particularly, has suffered a sharp decline, falling from $4.8bn in the previous year to $1.4bn this year – a drop of nearly 71%. At the same time, reinsurance expense for the industry was $12.9bn – an increase of over 28% on the previous year.
Despite this, Gross Written Premium (GWP) increased from $41.5bn to $43.8bn, overall industry underwriting profit rose more than 80% from $1.6bn to $2.9bn, and the net loss ration fell from 69% to 64%.
The APRA stats were based on information supplied by 99 direct insurers and 10 reinsurers. The report also includes detailed information on premiums and claims costs relating to CTP, householders insurance, fire and ISR, domestic and commercial motor, public and product liability, PI and employers’ liability.