Underwriting results for the general insurance industry returned to positive territory for the year to December, new figures from the Australian Prudential Regulation Authority (APRA) show.

The industry booked an underwriting profit of $4 billion, compared with an $80 million loss in 2020.

Overall, the industry achieved a net profit after-tax of $1.7 billion, up “significantly” from $60 million, APRA said.

“This improvement was driven by strong underwriting results caused by higher premiums and lower claims but investment income continues to be subdued,” APRA said.

Gross earned premium went up 9.4% to $57.5 billion and gross incurred claims decreased 18% to $38.9 billion.

APRA says insurers reported higher gross earned premium in most classes of business, including householders, domestic motor, fire and industrial special risks (ISR) and professional indemnity.

“This reflects the increase in premium rates across these classes,” the prudential regulator said.

The decline in gross incurred claims reflects lower incidence of natural catastrophe events in the householder class of business last year and in the reinsurance class of business.

For the ISR class, gross claims costs were comparatively lower due to the prior year one-off impact of large claims provisions raised by insurers for business interruption insurance claims.

However domestic motor claims costs increased during the period, reflecting higher levels of motor vehicle usage as covid restrictions eased.

On a quarterly basis, APRA says the industry fared worse with net profit dropping 87.5% to $100 million in the December quarter from the preceding three-month period as hail and storm events squeezed earnings.

Householders and domestic motor classes made underwriting losses during the quarter.

Gross earned premium improved 7.3% to $15.6 billion but the gain was erased by a blowout in gross incurred claims, which rose 14.3% to $10.8 billion.