Analysts fear insurance claims are rising at a rate above inflation – but they also believe premium growth will double in the next two years.

The prediction comes from Deutsche Bank and actuaries Finity Consulting, which last week released their joint annual review of the state of the general insurance industry in Australia.

The report, Pendulum 2008, is based on analysis of statistical releases from the Australian Prudential Regulation Authority (APRA).

Deutsche Bank analyst James Coghill says the report authors have taken a new tack to look forward at how the industry will perform over the next few years.

“We see premium growth doubling in the next two years,” he said. “This is a fairly bullish view on the top line.”

While last year’s report noted early indications that rate reductions could moderate this year, analysts now note concern about intensifying pressure on the margins, which is coming from a range of sources.

Finity Principal Andy Cohen says weather claims have pushed up the number of claims in personal and commercial lines.

“On top of that the economy is at a turning point right now,” he said. “We expect claims pressure going forward.”

More details in ANALYSIS.