Tower Australia Group has moved to what it describes as a more appropriate profit-reporting basis and will no longer use claims as the profit carrier for its individual life insurance business.

The company has told the Australian Securities Exchange that, with effect from October 1, 2007, it will be changing the basis for its individual life insurance profit reporting from claims to the more appropriate premiums basis.

In an explanation for the change, it said that premiums represented a more appropriate regime because it required simpler assumptions, was inherently more transparent and was consistent with the methodologies of other insurers such as AMP, ING and MLC.

The announcement said the change in profit reporting was expected to result in an increase in Tower Australia’s planned profit, leading to an uplift in underlying profit and net profit after tax of approximately $6 million in the 2008 financial year.