The US insurance industry is heading for another profitable underwriting year, despite a slight deterioration in its overall combined ratio, the Insurance Information Institute (III) notes in its forecast for 2008.

Respondents to an III survey predict a slight decline of 0.3% in net premium income growth and a combined ratio of 97.3%, which would make 2008 only the fourth year of underwriting profit for the industry over the past three decades.

Last year's mild catastrophe season propelled the industry to an estimated $US25 billion ($28.5 billion) profit and a combined ratio of 93.8 - a huge improvement on the 97.6 predicted in last year's survey.

III President Robert Hartwig believes insurers are in a better position than ever to withstand another major disaster, due to improved reinsurance, cat risk securitisation and modelling techniques.

He says pricing discipline, declining rates, macro-economic conditions, leakage of premiums to Government insurers and the trend to alternative forms of risk transfer are among the biggest challenges facing the industry this year.