Restoring confidence in the insurance industry in the wake of the Spitzer enquiries will be the No 1 global issue for insurers this year, according to Deloitte’s annual examination of the global insurance industry.

Melbourne-based Insurance Sector Leader Peter Caldwell says the US investigations by New York Attorney-General Eliot Spitzer into commission arrangements have set off a global “crisis of confidence”.

But he says he does not believe the Australian Securities and Investments Commission’s investigation into the practices of the Australian industry – which is due to be made public before the end of the week – will find widespread problems in Australia.

“We simply haven’t seen the kind of practices in Australia that are causing problems for insurers and brokers in the US,” he said.

Mr Caldwell says the general insurance industry has also had to overcome its own crisis of confidence following the collapse of HIH in 2001.

“The industry bounced back quickly and entered a period of strong profit growth under the leadership of some top quality management teams,” he said. “At the same time, we have seen a return to local ownership by all of our biggest insurers and a focus on the domestic market.

“With the industry now near the peak of its profit cycle, the major players in general insurance have some important strategic decisions about how they maintain their earnings momentum.”

Mr Caldwell says another big issue for general insurers in Australia is maintaining strong growth in a much softer market. “With the industry now near the peak of its profit cycle, the major players… have some important strategic decisions to make about how they maintain their earnings momentum.”

Enterprise risk management is another major issue for Australian insurers, and Mr Caldwell says that apart from compliance needs, this will be essential for insurers pursuing strategic growth options.

Other issues for the insurers to tackle are the decision to shift offshore operations, developing creative human resource strategies, and the challenge of international accounting standards.