IDII redeemed as insurance problem child

Mike Taylor

Managing Editor and Publisher

3 March 2023

The problem child for Australia’s major life insurers, individual disability income insurance (IDII) has turned a corner, with profits well up in December, last year, according to the latest data from the Australian Prudential Regulation Authority (APRA).

The APRA data showed that IDII ended December, 2022, with a net profit of $1,079.2 million, compared to just $541 million at the end of 2021, albeit that the regulator ascribed the improvement to movements in bond yields, repricing activities and releases of COVID-19 reserves.

The improvement in the IDII segment was enough to drive risk products to a net profit after tax of $1.1 billion.

The APRA data showed that for the year ended 31 December 2022, the industry reported a net profit after tax of $0.5 billion and a return on net assets of 1.8%, a decrease in comparison to the results from the prior year.

APRA said the driver behind the decrease in performance was an investment loss of $6.6 billion due to realised and unrealised losses on interest bearing investments.

In the superannuation dominated group sector, the APRA data showed Group Lump Sum and Group Disability Income Insurance (Group DII) business reported profits of $33.7 million and $352.0 million respectively for the year ended 31 December 2022.

It said that for both products, this is an improvement in performance in comparison to the prior year and driven primarily by lower net policy expenses for Group Lump Sum business and reserve releases for Group DII business.

The elements driving the change in fortunes around IDII will be discussed at Financial Newswire’s Life Insurance Outlook conference next Tuesday with complimentary registration available here: https://financialnewswire.com.au/life-insurance-outlook-conference-2023/