General insurance in the UK has a stable outlook, despite tough market conditions, according to Moody’s.

Sluggish economic growth will lead to less demand for general insurance products, while “persistently low interest rates” will continue to hit earnings, its report says.

Exposure to market turmoil in the eurozone “further increases risks of softening demand for insurance products”.

“In the face of weak demand and low investment yields, insurers have increased their focus on underwriting profitability,” report co-author and VP for European Insurance David Masters says.

Rate increases and expense reductions can stabilise or even improve underwriting profitability, the ratings agency says.

While forthcoming civil, legal and regulatory reforms may be positive for the industry, they also raise uncertainty, according to the report.