US insurers are raising property premiums as much as 20% in the wake of the hurricanes which have hit the US gulf states this year. The Risk & Insurance Management Society (RIMS) says a survey of members has indicated that premium renewals in the third quarter were 5% lower on average, but renewals since hurricanes Katrina, Rita and Wilma struck have risen.

The survey, which concentrates on third-quarter renewals, says renewal premiums prior to October showed evidence of insurers scrambling for market share.

RIMS Director Karen Beier says the “natural market reaction” to a profitable market is to drive down prices. “But the devastation of Katrina and Rita is only now beginning to translate into higher renewals prices. The whole picture could change dramatically in the coming quarters.”

Directors’ and officers’ premiums were down an average 8.45%, property just under 6%, and general liability down 5.2%. Workers’ compensation (down 3.75%) was the only insurance line to experience a fall of less than 5%.

The survey’s editor, David Bradford, says risk managers who waited too long for renewal terms and missed out on the reductions “are now explaining to their managements why renewal premiums just went through the roof”.

“The big question is whether Katrina and Rita will have a lasting effect and strengthen the market for a time – potentially in all lines of business, not just property – or whether this is a short-term blip in what has proved to be a pretty resolute soft market.”

The most recent estimates of the insured losses from the US hurricanes seem to be settling around $US34 billion ($45.4 billion), although analysts Towers Perrin estimated a few weeks that it may be as high as $US55 billion ($73.5 billion).