Australian insurance profits grew 8.3% last financial year to a post-global financial crisis record of $4.96 billion amid escalating competitive pressures, according to KPMG.

Rising premiums drove the gains, despite a slowdown compared with previous years, while the NSW bushfires were the only catastrophes to cost the industry more than $150 million, the group says in its annual General Insurance Industry Review.

“Willingness to sacrifice premium revenue growth for a higher-quality portfolio appears to be a response to the increasing price competition from challenger brands and products,” Asia-Pacific Head of Insurance Accounting Scott Guse said.

“While the largest insurers continue to dominate the Australian market, several of the smaller brands have demonstrated outstanding premium growth in recent years.”

The report also warns of future competition from technology companies such as Google, Amazon and Facebook.

Commercial business drove a 3% gain in surveyed insurers’ gross written premium to $32.58 billion, while personal lines remained relatively flat.

Stronger investment returns in equity and alternative asset markets were another contributor to the result for some insurers.

The industry’s insurance margin was 18.5%, compared with 17.8% a year earlier, while the combined operating ratio improved from an already comfortable 89.8% to 87.7%.

The expense ratio declined slightly to 26.1% from 26.4%, and the loss ratio of 61.6% was at its lowest for the past five years.

“The industry’s capital standing is in one of the strongest positions it has ever been, with coverage 1.9 times that prescribed by the Australian Prudential Regulation Authority, compared with 1.82 times for the previous year,” Mr Guse said.

He says competition could emerge from major technology companies if they decide to “flex their corporate muscles in the insurance sector” as they have in other industries.

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