The recent spate of natural disasters here and in New Zealand will see home and car insurance premiums rise "materially" in 2011, according to ratings agency Standard & Poor's.

The increases will be driven by the need for insurers to recover billions of dollars in claims and to meet an expected surge in the cost of re-insurance (which is the insurance insurers buy to give themselves added protection against higher than expected claims).

S&P reckons local insurers could have to pay price rises of 15% or more for their reinsurance cover from mid year when new contracts are set. Discussions were held in London 10 days ago by the companies and their reinsurers.

Higher premiums will be common for most parts of the country, but especially in the areas hit by the floods, storms and earthquakes (Christchurch in NZ). The increases will be concentrated in personal lines with business owners facing only modest premium increases, according to S&P.

The forecasts for higher premiums came as Standard & Poor's said Australian general insurers were financially well placed to meet the payout cost from the recent string of natural disasters.

This suggests that even with billions of dollars in payouts (especially for the Brisbane and Queensland floods and cyclones and the two Christchurch quakes), the general insurers are likely to avoid any negative hits to their credit ratings.

That's unlike in NZ where the second biggest home insure AMI (not to be confused with AAMI) has had to be rescued by the national government with a promise of an immediate $NZ500 million backstop because of mounting claims from the second Christchurch quake in February.

"While the spate of recent domestic natural disasters is bound to drag on earnings in the short-term, we expect the sector's capital strength and reinsurance protection will limit negative rating pressure," Standard & Poor's credit analyst Mark Legge said.

In a report