The property-casualty insurance industry is in better shape thanother financial institutions, but 2009 will likely be marked bychanges in both rates and regulation, industry executives said.

Five executives from the insurance brokerage subsidiaries of NewYork-based services firm Marsh & McLennan Companies and thepresident of the Insurance Information Institute discussed thestate of the insurance marketplace and the direction it may begoing in 2009.

In a Web seminar sponsored by Marsh, titled "Global InsuranceMarkets in 2009," the executives pointed to evidence of rateincreases across all lines of business, while I.I.I. PresidentRobert Hartwig noted that while the industry comes into 2009 inbetter shape than others, federal regulatory oversight may beunavoidable.

Reinsurance, which is usually the lead indicator of thedirection rates will take, is seeing some upward pressures,especially on certain property risks, while casualty is currentlyseeing flat levels or rate increases of 5 percent, said ChristopherKlein, from Guy Carpenter.

The market is reacting this way despite the fact the reinsuranceindustry has seen capital deterioration of 15-to-17 percent,according to Guy Carpenter calculations.

"That is painful, but not mortal," Mr. Klein said, noting that asignificant portion of that depreciation was due to share buy-backsand dividend payments.

The industry, he continued, is in fine shape compared to banksthat have lost more than 30 percent of their capitalization.

Generally, rating agencies have been "muted" in their reaction,because the reinsurers' capitalization has remained strong.However, there are some indications that could change, orcorrections could be in the offering.

Robert Howe, with Marsh's Global Property Practice, called themarket "firming," while George Parks, Marsh's Casualty Practice,said rates are flat to slightly up.

Competition remains a driving force behind rates, executivesnoted, because capacity still remains abundant in a number ofareas.

Mr. Hartwig opened the Web seminar discussion by noting that theinsurance industry entered 2009 in better shape than otherfinancial services companies but still suffered declines inrevenues. He attributed this to a combination of investment losses,the soft market keeping underwriting rates low, and loss in premiumvolume because of the economic crisis as clients reduced theirrisks.

The insurance industry, he said, remains well capitalized, andthe ability to pay claims and transfer risks remains unimpeded.

He said the insurance industry is in for some major changes ashe believes the federal government will seek to take moreregulatory control of the industry over state regulation.

"We are in the waning days of that exclusivity, but we justdon't know what form it is going to take," said Mr. Hartwig.

A re-broadcast of the Web seminar is available atwww.marsh.com.