Bottom-line profitability in the insurance industry remains robust despite the impact of catastrophic events, an easing in reserve releases and a two-speed premium market.

The annual JP Morgan Deloitte General Insurance Industry Survey, launched today, says the combined ratio for insurers in 2010 improved by four percentage points to 97% – after an underwriting loss in 2009 – thanks to average personal lines premium rises of 8%.

The figures include the impact of the Perth and Melbourne hailstorms, but were collated before the Christchurch earthquake and Queensland floods.

The survey says rate rises in personal lines were driven by headline increases in compulsory third party and householders insurance as underwriters recovered losses incurred from the hailstorms in Melbourne and Perth in March.

It predicts home and car owners will see premiums rise by a further 11% this year.

But it’s been a different story in commercial lines. While insurers last year tipped premiums to rise by 6%, the JP Morgan/Deloitte survey shows premiums across commercial lines fell by an average 1%.

“It was a year of two markets, with the trends more favourable for commercial lines, which had a combined ratio of 92%,” JP Morgan senior insurance research analyst Siddharth Parameswaran said.

“The biggest reductions were seen at the top end of the market, while small to medium sized enterprises were relatively flat.”

Competition and capacity concerns, flagged by insurers as their number one issue, are forecast to exert more downward pressure on premiums this year.

“Insurers expect rates in commercial lines for most classes to decline,” Mr Parameswaran said.

“We believe that competitive pressures and excess capital from overseas and changes in distribution platforms in the broker space will continue to pressure rates in the commercial classes into 2012.”

Brokers again cited staff recruitment and retention as their number one concern, while reinsurers continued to confront natural catastrophe event losses.

More than 40% of insurers now cite distribution trends as a key threat.

“This was not identified as an important issue in 2009,” Mr Parameswaran said. “In commercial insurance the rise of contestable platforms is still in various stages of development, although this could pose risks for the industry depending on how it is implemented.”