Despite Australian insurers continuing to drive most commercial rates down as the competitive urge grows, they should be prepared for rises in the next 12 months as reinsurers claw back their massive losses from the US hurricane season.

Zurich Financial Services CEO James Schiro says prices are likely to firm in 2006 and beyond. The unusually heavy hurricane season and other natural catastrophes have given insurers more pricing power, he says.

In an interview released last week by Zurich, he said the biggest price rises will be with retailers, industrial and commercial properties. But US gulf coast businesses will be particularly hard hit.

Interestingly, predicted hikes in reinsurance rates have yet to materialise. Leaders of the world’s largest reinsurers had predicted rises in virtually all their rates following the devastation of hurricanes Katrina, Wilma and Rita.

But nearly six months later, only specific lines appear to have been affected.

Only reinsurance cover against hurricane damage to commercial property including oil rigs and refineries has become significantly more expensive.

Mr Schiro says the major issues facing the global insurance industry at present are over-regulation, natural catastrophes, terrorism, climate change and pandemics.