High claims costs combined with typically lower net written premium saw the general insurance industry record a $300 million underwriting loss in the first quarter of this year.

Figures released by the Australian Prudential Regulation Authority last week show industry gross incurred claims rose $3.2 billion from the December quarter last year to $7.7 billion this year, pushing the industry into the red after three profitable quarters.

The March hailstorms in Melbourne and Perth are primarily responsible for denting the industry’s profits, although at $1.85 billion the expected cost of these events is significantly lower than the full increase in claims.

Net incurred claims for the first quarter were $4.3 billion, up from the $3.4 billion incurred in the previous quarter.

The rise in claims this year was partially offset by higher reinsurance recoveries revenue, which increased from $500 million to $2.7 billion during the quarter.

Net premium revenue for the industry for the 12 months to March this year was $25.5 billion, up 7.5% compared to the previous 12 months.

Despite the catastrophes of the March quarter this year, net incurred claims for the industry in the year to March were 16.6% lower than the previous period at $15.2 billion.