Across-the-board premium rises drove the industry to a 69.4% rise in underwriting profit to $6.8 billion for the year to December, latest Australian Prudential Regulation Authority (APRA) data shows.

The underwriting result partly offset large unrealised investment losses of about $1.7 billion and helped the industry achieve a net profit after tax of $2.3 billion, up 34.3% from a year earlier.

“The improvement in industry underwriting results was driven by an increase in gross earned premiums across all classes of business,” the regulator says.

Gross earned premium rose 9.2% to $62.8 billion but gross incurred claims also increased, by 19.8% to $46.2 billion due to the historic floods last year and other natural catastrophes.

“A series of adverse weather events throughout the year, including the NSW and southeast Queensland flooding event in the March quarter 2022, contributed to this increase,” APRA says, referring to the rise in gross incurred claims.

Pricing increases were “more prominent” in the Fire and Industrial Special Risks (ISR), Public and Product Liability, and Professional Indemnity product lines while the increase in gross incurred claims costs was “most notable” in short tail property classes of business such as Householders, Domestic and Commercial Motor and Reinsurance classes of business.

Net incurred claims however only increased by a slight 3% to $27.4 billion, the result of an increase in reinsurance recoveries offsetting the increase in gross claims costs. APRA says the small rise also reflected the unwinding of provisions for covid-related business interruption claims and the impact of higher bond yields on claims reserves.

The APRA update is based on regulatory returns from 89 insurers.

For the December quarter the industry made a net profit of $1.4 billion, up from $900 million in the preceding quarter.

APRA says the improved profit was driven by a strong rebound in investment income, which surged to $1 billion from about $100 million. Underwriting profit during the quarter was broadly stable at $1.6 billion.