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Home insurance still in red: APRA data 

Houseowners/householders insurance remains a troubled spot for the general insurance industry even after sharp rate rises in response to last year’s catastrophic floods and rising costs across claims and reinsurance. 

The industry made an underwriting loss of $205 million from the line for the year to June 30, according to Australian Prudential Regulation Authority (APRA) data. In the year earlier period the industry lost $199 million. 

In the December quarter alone the home insurance sector suffered an underwriting loss of $454 million and lost $126 million in the following March quarter before recovering with a $294 million profit in the June quarter. 

The latest APRA industry update shows houseowners/householders outwards reinsurance expense eased slightly to $4.08 billion from $4.162 billion but recoveries from reinsurance have shrunk sharply, to $2.3 billion from $5.2 billion. 

Overall, the industry posted significantly higher net profit for the year to June 30 of $4.6 billion from $900 million a year earlier. 

APRA says the increase in net profit after tax was driven by a “strong” recovery in investment returns, which came in at about $3 billion compared with a year-earlier deficit of $2.8 billion. 

The investment turnaround came mostly from unrealised gains from interest-earning investments, the prudential regulator says. 

However underwriting profit declined 6.3% to $5.7 billion from a year earlier as net incurred claims rose significantly by 16.1% to $30.3 billion. 

APRA says the jump in net incurred claims was largely due to a reduction in reinsurance revenue across almost all lines of business.

Despite the weaker underwriting performance APRA says the results “remained relatively strong, driven by insurers raising premiums in response to recent higher claims costs”.