Westpac’s wealth-management arm took a hit on profits as regulatory changes, natural disasters and a spike in life insurance claims choked earnings, according to a report by The Australian
BT Financial Group saw its profits fall by 11% for the six months to the end of March, The Australian reported. The division’s cash earnings came in at $397 million. Those earnings were hampered by a spike in claims following Cyclone Debbie and a number of other natural disasters over the summer, as well as the cost of compliance with new regulations.
According to The Australian, financial advisers sold fewer products during the half year as new regulations were enacted. Meanwhile, profit margins on higher-fee superannuation products dropped as assets were transferred to low-fee MySuper products in time to meet the government’s deadline at the end of the financial year.
The cost of implementing life insurance reforms alone has cost BT Financial $26 million, chief executive Brad Cooper told The Australian
“We are going through a transitionary phase,” Cooper said.
The life insurance sector has also been inundated with a surge in claims – a surge exacerbated by heightened awareness of insurance policies in superannuation and more intense media and regulatory focus on poor claims-handling within the industry, The Australian
Westpac said its life insurance income dropped 11% year-on-year, with even increased premiums failing to offset the jump in claims.
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