Most general insurance companies managed to generate profit from their core business last year, although incomes were squeezed.

And even though they have been weaning themselves off government bonds, which have been giving declining returns, the industry as a whole relied more on other income than underwriting profit.

Combined underwriting profit — earnings made from underwriting insurance — across nine general insurers totalled $724 million in 2012, down from $837 million the year before.

It was still still better than the $785 million loss in 2010 and billions of dollars more over the better part of the last decade.

Over the years, insurers have relied on investment income to post net profits in spite of their underwriting losses.

But the Government debt swap of 2010 resulted in a dramatic reduction in interest rates and as a result investment income earned by financial institutions.

For instance, the general insurance sector generated net profit of $1.1 billion despite the $785 million in combined underwriting losses in 2010, and reported even higher profit at their bottom line the year before when they collectively incurred underwriting loss of $2.6 billion.

The need to meet the solvency requirements of the regulator, the Financial Services Commission, and the capital requirements to cover insurance claims, have pushed insurers to keep their businesses profitable.

In light of falling investment income, insurers had to focus more on their core business.

But taking another hit with the National Debt Exchange in March, followed by the Private Debt Exchange, means that insurers will have to redouble efforts to increase profitability of their core business.

That will likely mean higher premiums for insurance, and the hope that damage to property that comes with major weather, such as hurricanes, stay at a minimum.

Across the nine general insurers, gross premiums grew by seven per cent to over $28 bllion.

However, claims expense jumped by 32 per cent to over $9 billion.

Motor insurance premiums will likely see the highest increases, given that it has the least reinsurance coverage compared to other categories and is susceptible to the highest number of claims.

Even then, the number of motorist not meeting the legal requirement to insure their vehicles still remain high.

There are 300,000 cars that are insured compared to some 400,000 vehicles that operate on the road, by some industry estimates.

Not all insurers reported a decline in underwriting performance for 2012 — three showed an improvement in their results.

Similarly, British Caribbean Insurance Company reported an underwriting profit of $146 million in 2012, compared to a loss of $103 million the year before, while Advantage General Insurance increased its underwriting profit from $449 million to $623 million.

Key Insurance posted an underwriting loss of $128 million last year, but it was lower than the $148 million loss it incurred in 2011.