Severe weather events have suppressed the profit of Wesfarmers Insurance, with a 17% rise in claims causing its Lumley Insurance arm to record its first underwriting loss in 20 years.

The insurance division of the giant conglomerate reported a 24% fall in earnings to $103 million before interest, tax and amortisation, compared to $135 million last year.

The Victorian bushfires capped a litany of claims during the year. A 2% increase in gross written premium to $1.36 billion was not enough to overcome a 17% rise in total claims of $738 million. That result tipped the net underwriting result $32 million into the red, with a combined ratio of 103.2%.

Wesfarmers Insurance underwriting earnings fell 55% to $33 million before interest, tax and amortisation (EBITA), despite a $32 million turnaround in Lumley NZ's profitability. The group's underwriting businesses include Wesfarmers Federation Insurance, Lumley Australia and Lumley NZ.

There was better news among Wesfarmers' broking operations, which increased earnings 9% to $61 million on an EBITA basis. The broking operations include OAMPS in Australia and the UK and Crombie Lockwood in NZ.

"This is a strong result in the current market which demonstrates the strength of our broking platform," MD Rob Scott said.

Cost-cutting measures undertaken by OAMPS Australia and the introduction of a new management team at Lumley Australia are tipped to improve future profitability.