Following a sharp decline in losses from hurricanes and other natural disasters in 2006, the US general insurance industry is now in fine shape.

The industry posted a $US31.2 billion ($37.3 billion) net gain on underwriting, compared with a $US5.6 billion ($6.7 billion) net loss on underwriting in 2005.

The industry’s positive underwriting results contributed to an increase in net income after tax to $US63.7 billion ($76.3 billion) in 2006, from $US44.2 billion ($53 billion) the year before.

The Property Casualty Insurers Association of America and the New Jersey-based risk information service ISO say government data and market surveys indicate the improvement in insurers’ financial results has led to increased competition in many insurance markets.

According to ISO’s Property Claim Services unit, direct insured losses from catastrophes dropped to $US9.2 billion ($11 billion) in 2006 from $US61.9 billion ($74.16 billion).

ISO Assistant Vice President for Financial Analysis Michael Murray says insurers and residents of coastal states “dodged a bullet” last year.

“Though the experts were predicting a highly active hurricane season, no hurricanes struck the US, giving insurers and the areas hit by the six catastrophic hurricanes in 2005 much-needed time to recover.”

ISO estimates catastrophe losses included in private US insurers’ net financial results declined $US21.9 billion ($26.2 billion) to $US11.7 billion ($14 billion) in 2006, compared with the $US33.6 billion ($40.26 billion) posted in 2005.

This allows for losses from Katrina, Rita, and Wilma that didn’t emerge until after insurers closed their books for 2005. It also factors out losses covered by residual market insurers, the Florida Hurricane Catastrophe Fund and foreign insurers.