Ratings agency Standard & Poor’s (S&P) has given Australia’s general insurance industry a clean bill of health, despite the impact of the recent natural disasters.

It says the general insurance sector remains “financially well placed” to meet the costs of the catastrophes.

While there will be a short-term effect on insurers’ earnings, “the sector’s capital strength and reinsurance protection will limit negative rating pressure”, with the outlook for the sector remaining stable.

“We expect the generally sound capital positions of Australia’s non-life insurers and extensive reinsurance protection to limit any downward rating action at this stage from the series of severe catastrophic weather,” the report says.

S&P says it will be watching closely premium increases, particularly in personal lines, and the terms, pricing and capacity of reinsurance available when it considers future credit ratings.