DRIVERS face higher premiums after the motor insurance sector went into reverse gear in the first quarter and racked up an underwriting loss of $13 million.

The result - described as alarming by an industry leader - was a huge turnaround from last year's $11.1 million profit, according to figures from the General Insurance Association of Singapore (GIA) released last Friday.

They also show that the sector seems to be stuck in first gear with gross premium income of $195.7 million for the three months ended March 31 - only marginally up on the $194.7 million a year ago.

GIA president Derek Teo called the results "alarming" and reiterated that"Singapore motorists can expect to pay more to insure their vehicles from now on".

He said: "We advise motor policyholders that our industry can no longer sustain these kinds of escalating losses in a market which is such a key component in our business.

"Motor insurance premiums have been too low for a considerable period and theseunsustainable losses must be corrected."The road has been getting progressively bumpier for the past two years.

The industry enjoyed a $46.3 million profit in 2005 but skidded into the red last year - with an underwriting loss of $625,000, despite a profitable first quarter.

At least the motor insurers are not alone. Underwriting profit for the general insurance sector declined 9.4 per cent to$54.5 million for the quarter, against $60.1 million in the same period last year.

This was despite gross premiums rising by 7.7 per cent to $670.7 million in the January to March period from $623 million last year. GIA attributed the decline in underwriting profit to rising claims and management expenses.

The workers' compensation sector saw an 18 per cent jump in gross premium income to $60.8 million, up from $51.4 million.

Losses for this class were trimmed to just $182,000 in the first quarter, from $4.4 million previously.

On a brighter note, marine hull and personal accident insurance showed strong income and profit growth. Underwriting profit for the marine hull sector jumped by 193 per cent to $6.6million. Gross premium income rose by 4 per cent to $18.3 million.

And thanks to increased demand for travel insurance, the underwriting profit of personal accident insurance doubled to $21.1 million from $10.5 million a year earlier.

The sector recorded gross premium income of $73.9 million, against $59.9million previously.