The US insurance sector is a “tale of two markets”, sharply divided between soft, non-catastrophe lines and harder property insurance premiums in regions at risk of a natural disaster.

After recovering much of its catastrophe losses in 2006 following two years of above-average claims – Swiss Re estimates $US131 billion ($157.5 billion) in insured natural catastrophe losses in 2004/05 – insurers in the US property market are facing stiff competition or almost none at all, depending on their choice of customer.

The latest report from Marsh says the market is soft outside catastrophe-prone areas as insurers continue price wars over premiums while expanding market coverage.

However, the market remains relatively hard in areas subject to natural disasters.

Marsh’s spring report “Marketplace realities and risk management solutions” says there are still shortages of capacity for cover against hurricanes, floods and earthquakes.

“In some places, it remains impossible to purchase enough insurance to qualify for a commercial mortgage-backed securities loan unless the lenders agree to modify the insurance requirements.

“A beach resort may not be able to buy more than $200 million of hurricane insurance no matter how much money they are willing to spend.

“On the other hand, except for insurance against natural catastrophes, the market in May 2007 is softening and the rate at which it is softening seems to be accelerating every day.

“There is vigorous competition, rates are falling and there is more capacity.”