Sector executives told a House of Representatives economics committee on Friday that the general insurance sector, in particular, was enduring its most challenging circumstances in two decades.

"While over the last 14 months the Australian community has been focused on the pandemic, since the devastating bushfires of 2019 we have also endured two major flood events, a category 3 cyclone, two destructive hailstorms and a bushfire in the Perth Hills," Insurance Council of Australia chief executive Andrew Hall told the hearing.

He pointed out that the sector's profitability had slid 64 per cent over the 24 months ending March 2021, with the entire general insurance sector making a a total $19 million profit in the March quarter, largely because of the impact of natural disasters.

The insurance sector has been under fire over the affordability of products and Mr Hall said ICA was aware and looking to address the issues, even though there were no easy solutions because of cost pressures on insurers.

The sector suffered a further blow on Friday after the High Court rejected an appeal from insurers to avoid paying out business interruption claims lodged during the COVID-19 pandemic.

The insurance industry had been attempting to block businesses from making claims for interruption to their operations due to the pandemic. It suffered a 5-0 loss in the NSW Court of Appeal in November last year.

Insurers will now be open to claims running into billions of dollars.

IAG chief executive Nick Hawkins said his company alone could face business interruption claims of up to a billion dollars, but cautioned that only some customers would receive payouts as a result, while others would have to wait for the result of a second case.

Insurers have filed a second test case in the Federal Court which will determine the meaning of certain policy wordings.

Meanwhile, other parts of the industry have seen only limited impact from the pandemic.

Two of Australia's leading life insurers told the committee that while there was an impact on operations, claims management actually improved last year.

ClearView managing director Simon Swanson said there had been a concern that suicides would go up amid the pandemic but that did not materialise.

"Suicides actually went down and part of that was because people were participating in a global pandemic, everyone was in this together," he said.

"There was also an incredible increase in telehealth, which was an interesting part of technology and actually delivering to consumers."

TAL chief executive Brett Clark said his company last year increased provisions for future claims by hundreds of millions of dollars but did not see claims go up as a result of COVID 19. It has now released many of those reserves, he said.

He attributed the results to how the "COVID situation in Australia as been handled very well compared to other countries around the world".

Last month, figures from the Australian Prudential Regulation Authority showed the life insurance industry notched up net profit after tax of $1 billion for the year ended March 2021, a significant improvement from the previous year, mainly thanks to lower expenses.

Still, the officials said there could be future claims due to heart attacks, cancer or strokes because a number of people had deferred going to see doctors during the pandemic

"We expect to pay more claims in the future but that will largely be a result of second order effects of mental illness, which are impacting Australians as a result of lockdowns, employment availability, and other stressors related to the pandemic," Mr Clark said.

The inquiry also heard from executives of Suncorp, QBE and Cover More.

Australian Associated Press