General insurance premiums in Australia and New Zealand rose by 2% to $US42 billion ($39 billion) in 2010, according to a new report by Swiss Re.

It says most business lines maintained stable growth during the year and underwriting results improved.

The overall combined ratio of general insurers climbed to 100.6% in 2010 compared to 97.5% for the previous 12-month period.

But Swiss Re is predicting the profitability of general insurers in Australia and NZ will be sharply lower this year due to the number of natural catastrophes.

“The effect of these extreme weather events will continue to have a material impact on the overall profitability of the insurance industry,” the report says.

Life insurance premiums in Australia and NZ increased by 2.7% in 2010 to $US39 billion ($36.2 billion) driven by strong economic growth.

Profitability of life insurers in the two countries improved by 4.1% during 2010, the report says.

Swiss Re says the growth of the Australian life insurance market is expected to remain stable in the near future.