Profits in the Australian life insurance industry for the year to March 31 are down more than one third on the previous year on the back of rising lapse rates, according to APRA.
According to the most recent statistics, the industry recorded a net profit of $2 billion for the period, indicating a 34.7 per cent drop.
Looking at the March 2014 quarter, net profit was $627 million, down from $723 million in the prior corresponding period.
The drop in profit was coupled with an accompanying rise in total expenses over the 12 months.
Total expenses in the year to 31 March 2014 were $38.8 billion, up from $34.9 billion in the previous year.
Total expenses comprised net policy expenses, operating expenses, effective movement in net policy liabilities, change in policy owner retained profits and other expenses, according to APRA.
Net policy expenses were $7.3 billion in the year to 31 March (up from $6.6 billion in the previous year), operating expenses were $7.9 billion (up from $7.4 billion), effective movement in net policy liabilities was $23.3 billion (up from $20.6 billion), change in policy owner retained profits was $202 million (up from $144 million) and ‘other expenses’ were $83 million (up from $103 million).