The general insurance industry has managed to escape the worst of the current global financial crisis, despite its increased involvement in capital markets.

A report by Zurich Australia says the industry has played little role in the evolution of the crisis, but it can learn from failings evident in other sectors to maintain a stable environment in future financial crises.

The Zurich study comes at the same time as a Moody’s Investor Services report finding European insurers have also escaped the worst of the global credit market turmoil [see INTERNATIONAL].

Adam Squire, Zurich Australia’s general insurance Head of Planning and Business Practice, told insuranceNEWS.com.au the Australian industry is in reasonable health despite the impact of the crisis on other financial services industries.

“The insurance industry tends to have a conservative approach to investment of its capital and, therefore, direct exposure is relatively limited,” he said.

Mr Squire says QBE’s recent purchase of mortgage insurer PMI Australia was one sign of the evolution of the crisis, with QBE making an “opportunistic purchase” when the US parent appeared to have overextended.

“As an industry we have been fairly passive other than through the market exposure of investments,” he said.

Warning regulators against making “knee-jerk reactions”, he says they need to maintain a balance between the cost of regulation and the competitiveness of the industry – “particularly when the industry is already healthy and well-capitalised”.