The economic downturn will put pressure on gross written premium growth and is likely to spur increased claims on certain insurance lines, a leading industry analyst claims.

JP Morgan analyst Siddharth Parameswaran told the Institute of Actuaries of Australia (IAA) annual seminar at Coolum last week that general insurers still face challenges despite being well placed when compared to other financial services providers.

Mr Parameswaran expects gross written premium to slow and says economic conditions may increase claims for directors’ and officers’ liability insurance.

Lower interest rates may have an impact on investment returns while weaker equity markets should also drag down results, he said. Some insurers could also see their reserves dry up.

On the plus side, “insurers have much less credit risk than banks and no liquidity risk due to an incoming stream of premiums to fund payments”. Rising premium rates are also likely to continue.

Mr Parameswaran says that unlike life insurers, general insurers have no capital guaranteed investment product liabilities and unlike wealth managers have no “direct asset value-related revenue streams”.