Profitability for New Zealand’s general insurance industry is expected to remain sound for the rest of this year and all next year, according to Standard & Poor’s (S&P) credit analyst Kate Thomson.

She says insurers should maintain their solid underwriting profitability by sustaining technical premium rates, improving personal lines profitability, and leveraging off low industry expense positions.

“Some moderation in profitability is possible due to rate reductions in commercial lines, intense competition for personal lines business, and troublesome storm activity,” Ms Thomson said.

S&P’s assessment of NZ industry risk improved earlier this year, reflecting sustained profitability among participants, solid premium volume increases in the past two years after a period of stagnation, and strong Australian ownership and associated regulation.

“Importantly, we believe that New Zealand’s exposure to natural disasters continues to be well managed through catastrophe reinsurance from offshore providers,” she said.

Of the 25 general insurers in NZ who are rated, 75% are A or better. S&P says small start-up insurers (rated in the ‘B’ range) represent an emerging sector, providing credit insurance and property-type insurance for customers of related finance companies.