Four in 10 life insurers in Australia reported losses during 2020, report by KPMG shows
Australian life insurers reported a total loss of $1.3bn in the 12 months to 30 June, leading market experts to expect a rise in premiums.
Forty percent of life insurers reported a loss during this period, a report by KPMG has found, with retail income protection (IP) showing $1.1bn losses due to overly generous terms being offered in recent times.
The Australian group risk market suffered $353m losses for 2020 financial year - falling dramatically from the $415m profits posted last year, with group income protection losses increasing from $156m to $249m.
The only section of the market to report a profit was retail lump sum, however this fell from $422m to $324m.
The findings come as life insurers faced increased risk of disability and death claims as a result of the Covid-19 pandemic.
The problems related to retail income protection are not new. Last month, the Australian Prudential Regulation Authority (APRA) demanded a product overhaul in the face of competitive pricing and rising mental health-related claims.
APRA warned insurers would be hit with fees unless they stopped selling unsustainable disability insurance products.
Australia's Actuaries Institute has also called for retail income protection reform.