Standard & Poor’s say rates hold firm despite hurricanes

Although the global insurance industry will incur tremendous losses due to hurricanes Katrina and Rita, European insurers are expected to at least maintain their current pricing levels, according to Standard & Poor’s Corp. recent report, “Industry Report Card: European Insurance.”The report states that the recent hurricanes “will force insurers to re-examine net retentions, limits and reinstatement positions.””At this point in the non-life cycle, large events like Katrina and Rita will help the insurance sector maintain harder pricing before competition has eroded margins to or even below technical prices,” the report continues. While Katrina and Rita are U.S.-based losses, the overall reinsurance capacity is expected to be tighter in 2006 and the report explains that concurrently primary insurers will be trying to increase protections. In lieu of the increased cost of protection coverage it is expected that both Europe and North America will share the costs because reinsurance is a global business.Losses from Katrina and Rita however, may not affect the financial strength ratings of European insurers, according to S&P’s report.