The life insurance industry recorded an after-tax profit of $2.3 billion last year, falling dramatically from $3.1 billion in 2015, according to the latest Australian Prudential Regulation Authority data.

The slump is due to disability income insurance, where expenses increased to $3.2 billion from $2.4 billion.

Gross policy income was $22.6 billion last year, up from $20.8 billion in 2015.

Claims totalled $8.6 billion, up from $7.6 billion.

Policies maturing totalled $421 million, down from $459 million. Lapses were almost static at $466 million.

Upfront commissions increased to $1.6 billion from $1.4 billion, and trails totalled $2.7 billion, compared with $2.4 billion in 2015.

Individual lump sum remains the largest and most profitable segment, with gross policy revenue up to $9.2 billion from $8.4 billion.

Lump sum total expenses were up to $6.4 billion from $5.6 billion, and after-tax profit dropped to $917 million from $1.1 billion.

In income protection, after-tax losses blew out to $517 million from $54 million, despite a slight rise in gross policy revenue to $3.3 billion from $3 billion.

Group life lump sum gross policy revenue was flat at $6.4 billion, while total expenses increased slightly to $4.3 billion from $4.1 billion. Profits in the segment were flat at $330 million.

Group income protection made a $43 million after-tax loss last year, compared with a $1 million profit in 2015.

Gross policy revenue declined slightly to $2 billion from $2.1 billion, and total expenses were flat at $1.3 billion.