Bankers hoping to get an earnings lift from improved contribution from their insurance divisions will find the latest JP Morgan Deloitte general insurance industry survey sobering. The survey, released yesterday, forecasts a deterioration in the sector's profitability in 2009.Insurance is still small beer to banks. Both Commonwealth and Westpac are having a go at growing organically in general insurance, though together they speak for less than one per cent of the market.ANZ has no consumer insurance or business insurance entity, but does operate a captive mortgage insurance business as does Westpac.NAB has little to do with general insurance.So while the headwinds blowing in insurance will have only a minor affect on bank earnings, the adverse insurance climate is typical of the experience of many business sectors.The JP Morgan Deloitte survey shows the general insurance industry has held up pretty well over the past year. The industry's combined ratio (claims and underwriting expenses as a percentage of premium income) was 94 per cent in 2008, unchanged from the previous year.Respondents to the survey said they expected the combined ratio to rise to 96 per cent this year (a combined ratio of 100 per cent or more indicates that an insurer is losing money on underwriting). The industry's problem areas are all in commercial classes of insurance. Earnings from directors' and officers' insurance, professional indemnity, and workers' compensation are expected to be weaker.JP Morgan senior insurance analyst Siddharth Parameswaran said: "We are going to see more class actions and litigation involving company directors and executives. That is going to affect claims on professional indemnity and directors' and officers' policies."Parameswaran said insurers have tended to underestimate the deterioration in market conditions in the past. The increase in the combined ratio could be more than forecast.He said some classes of insurance perform better when times are tough. People tend to drive less and this reduces the incidence of claims against domestic and commercial motor policies.Insurers are hoping to increase premium rates. In 2008 insurers were able to increase premiums for domestic motor and household policies. But with the exception of commercial motor, premiums on all classes of commercial insurance fell. Insurers are predicting an average increase of five per cent in premiums on domestic policies and three per cent on commercial policies. Parameswaran said another problem for the industry was that reserve releases, which have boosted profits in recent years, are drying up. "A few listed insurers have indicated that reserve releases in the coming periods will be substantially lower than in previous years."