Catastrophe risks can expect to see double-digit insurance premium increases through the rest of this year as underwriting capacity dwindles and the hurricane season approaches, an executive from Marsh said.

After years of the competitive soft pricing market cycle, insurers will be seeking increases on heavy catastrophe-exposed risks that could go higher than 15 percent, said Duncan Ellis, leader of Marsh’s U.S. property practice.

Mr. Ellis said key factors for rates are the insured’s loss history, exposure, modeling and discounts previously received during the soft market.

“Those that received the biggest soft market discount will see the largest increase,” he said, adding that the increases could range from 10-to-15 percent or higher.

His comments came during the insurance broker’s monthly “New Reality of Risk” online seminar, during a session titled “Natural Disaster Risk Management–Current Issues For Hurricane, Flood And Earthquake Perils.”

Mr. Ellis said the overall property- catastrophe market is going through “dramatic transition” as prices rise and capacity in reduced. Other factors affecting property cat pricing are increased reinsurance costs, lack of capital market support, rating agency scrutiny and changes in catastrophe modeling that are affecting capacity availability, he explained.

Earlier this year, capacity was available, but “for some there was a struggle to achieve capacity at what would be considered an economic price”–a price acceptable to both buyer and insurer.

Generally, catastrophe renewals in the first quarter of 2009 came in at flat to up 10 percent. The second quarter is expected to be higher because of diminished capacity and the onset of the hurricane season, Mr. Ellis said.

To combat these issues, Marsh, a subsidiary of New York-based Marsh & McLennan Companies, is marketing accounts to a wide array of players as it seeks layers to cover the risk, he said. One strategy to control pricing is to work with the lower layer insurers, which he indicated could reduce the overall cost of the insurance placements.

For non-catastrophe property risks the market will remain extremely competitive, he noted, because insurers want these risks to balance out their portfolios.

Catastrophe modeling remains the key driver for the p-c marketplace, with rating agencies relying on them heavily for their analysis, Mr. Ellis said.

Insurers, he explained, are trying to “get pricing back in line with modeling,” and some insurers are pursuing price increases regardless of changes made to the models because of the soft market pressures on their earnings. He added that the models, which will incorporate lessons learned from last year’s Hurricane Ike, may not differ that dramatically from the current ones.

Separately, a weather forecasting operation and a catastrophe modeling firm delivered forecasts of storm activity last week.

WSI, which issues the GC ForeCat product with MMC’s reinsurance broking unit, Guy Carpenter, said it now predicts that 11 named storms, six hurricanes and two intense hurricanes will develop this year, providing a downward revision of an earlier forecast.

The company said the latest numbers are lower than those in its December forecast, which predicted 13 named storms, seven hurricanes and three intense hurricanes.

Its reduction in the storm prediction is due to cooler sea surface temperatures in the tropical Atlantic Ocean and a fading La Nina event in the eastern Pacific, WSI said.

WSI said its new forecast numbers are relatively close to the long-term average (1950-2008) of 9.8 named storms, six hurricanes and 2.5 intense hurricanes.

Meanwhile, Newark, Calif.-based catastrophe modeler Risk Management Solutions said last year’s severe weather season can be expected to occur every four-to-five years.

Despite what RMS described as an unusual period without a severe season, 2008 was marked as the costliest and deadliest in a decade.