NU Online News Service, Sept. 25, 3:13 p.m.EDT

Low pricing conditions are expected to continue into next yearas more capital begins flowing back into the insurance market andthe economy improves, Guy Carpenter's chief economist said.

There is currently a resurgence in the sale of catastrophe bondsas the world's credit crunch has begun to ease and markets open up,explained Sean Mooney of Guy Carpenter reinsurance brokerage.

The issuance of such bonds, which are used by companies to covera specific risk, have "gone way up" to $3 billion, and while not arecord, "it provides clear evidence of a more competitive marketfor risk transfer out there," he said.

His remarks came as part of a panel discussion on the commercialinsurance marketplace sponsored by Guy Carpenter's sister company,Marsh insurance brokerage, both of which are subsidiaries of theNew York-based services firm Marsh & McLennan Companies.

This increase in capital will mean the continuation of the softmarket, said Mr. Mooney, with renewals about flat.

"The more supply of capital means softer market positions," Mr.Mooney observed.

In order to create growth on the property side, there may be anincrease in acquisition among insurers, he remarked.

While on the casualty side, Mr. Mooney said, the concern is thatinflation worries could spell significant problems for insurers infive to six years. He added that the inflation spiral, if itbecomes a reality, could produce inadequate reserves for insurersover the long term.

Looking more deeply at the property business, Duncan Ellis ofMarsh's Global Property Practice said that despite talk about ahardening market, rates for the first half of 2009 remainedstable.

A Marsh survey of 1,000 U.S. clients on their renewals showedthat half experienced price increase or decrease in the range of 5percent. For the first nine months of this year, the median rangewas flat. The average change was minus 2 percent.

However, risks with significant catastrophe exposure, eitherwind or earthquake, experienced increases of up to 8 percent inJuly, and some individual risks the renewals went as high as 15percent. Those risks with no or little catastrophe exposure sawtheir rates decrease 3 percent.

For the future, Mr. Ellis said for the vast majority of accountswould remain in a stable range of plus or minus 10 percent, barringa major catastrophic loss. He cautioned that individual risks couldsee significant increases based on their exposure and losshistory.

However, if there is a costly catastrophic event, Mr. Ellisnoted that the market could turn around with significant increasesin that marketplace. The increases would be seen later in therenewal cycle post event, he said.

The Web seminar titled "A Strategic Overview of the CommercialInsurance Market for 2010 Budgeting" can be viewed at www.marsh.com.