Colo. wants industry to account for rising rates

The insurance industry came out strongly against a Colorado measure that would require it to disclose claims, payouts and rates, telling lawmakers a plan to increase regulation of their industry would drive up costs and force some companies to stop selling insurance.

Steve Rubin, spokesman for COPIC Insurance, said Colorado regulators have done a good job keeping costs for customers down. He said his company would be unable to meet some of the proposed regulations because the information is not available, including the amount of money insurance companies spend on settling malpractice cases.

"We don't know how much the attorneys get," he told the House Business Affairs Committee, which delayed action on the measure (House Bill 1330) so it could gather more information.

House Speaker Andrew Romanoff, D-Denver, said his constituents are paying more for insurance and he wants to know why. Supporters of the measure said the state has imposed significant limits on damage claims and consumers should benefit.

Romanoff said there is no way of knowing whether insurance companies are raking in big profits because they are not required to report that information to the state insurance commissioner. Under Colorado law, information used to set rates is based on future projected claims, which lawmakers said have been inflated.

According to the National Association of Insurance Commissioners, Colorado consumers paid an estimated $8.8 billion in premiums, and companies paid out $5.2 billion in claims.

Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Wyoming litigation legislation could hurt consumers

Wyoming legislation designed to allow unprecedented insurance-related lawsuits in the state would significantly increase fraud, lawsuits and insurance costs for Wyoming consumers, according to the Property Casualty Insurers Association of America (PCI).

The proposal, Senate Bill 68 introduced by Sen. Hank Coe, R-Cody, is scheduled to be considered by the Senate Judiciary Committee.

Kelly Campbell, PCI regional manager, said, "SB 68 would increase claims costs, prompt greater fraud and result in substantially higher liability insurance premiums. As lawsuit volume goes up, costs will go up as well for Wyoming's courts, taxpayers, and public and private liability insurance buyers," she said.

Campbell explained that the measure would allow insurance claimants who are unhappy with their claims handling to file a "second lawsuit" directly against the insurer by alleging a single violation of the state's Unfair Claims Settlement Practices Act.

Under current Wyoming law, which follows the recommendations of the National Association of Insurance Commissioners, the insurance commissioner's job is to punish insurers if they engage in patterns of claims misconduct -- as opposed to the single acts SB 68 would allow.

"California a number of years ago had a similar litigation law, which led to dramatic increases in lawsuits. Auto liability litigation alone jumped more than 80 percent before the rule was discarded," Campbell said.

In overturning the law, California's high court said the statute "may tend to encourage unwarranted settlement demands by claimants, and to coerce inflated settlements by insurers seeking to avoid the cost of a second lawsuit and exposure to a bad faith action."

Campbell said, "This legislation would come with too high a price for Wyoming consumers."

PCI urging Colo. lawmakers to reject insurance data reporting bill

The Property Casualty Insurers Association of America (PCI) testified before the Colorado House Business Affairs and Labor Committee that legislation HB 1330, which would impose extensive new data reporting requirement on property casualty insurers, would not help consumers make more informed decisions.

House Bill 1330 would require property casualty insurers file with the commissioner of insurance and make publicly available a broad range of data including information on new and closed claims, the severity of injuries and the amount of economic damages associated with claims, information on the historical accuracy of an insurer's incurred loss projections and information on expenses, the association said.

"We believe this bill is a solution in search of a problem," said Kelly Campbell, regional manager for PCI. "Consumers buy insurance based on their individual needs, the assets they have to protect and their budgets. While we fully support arming consumers with information, the type of information being requested will not help anyone make a more informed insurance purchase. Simply providing consumers with more numbers does not necessarily give them more useable information. The bill would create an administrative burden that would add costs to insurance without providing any benefit."

The bill would also reportedly prevent insurers from using loss experiences from other states and nationwide experiences in certain situations when setting rates, she added.

Under current law, insurers are already required to use Colorado claims experience to set rates except for the introduction of a new product or when a small insurer has limited claims experience in the state.

"This legislation would act as a disincentive for insurers to innovate and create new insurance programs," Campbell said. "In addition, this bill could hurt small carriers in the market.

"There are more than 200 insurers that write property and casualty insurance in Colorado and the vast majority of them are smaller companies. These restrictions to use only Colorado data could make it difficult for them to price their product competitively in our state," she added.

Wash. Senate passes changes in unemployment insurance

Washington Senate Democrats have approved a bill that would permanently change unemployment laws to pay additional benefits to seasonal workers.

The measure, which passed on a 25-22 vote, reverses the state's move toward "four-quarter averaging" in which unemployment benefits are calculated by determining a worker's full 12-month salary. The two-quarter system to be made permanent under the bill gives seasonal workers -- laborers who may only work for six months out of the year -- full unemployment benefits.

"We want to make the system fair," said Sen. Jeanne Kohl-Welles, D-Seattle, the bill's primary sponsor.

The bill now goes to the House.

The state has extra money in its unemployment insurance fund since altering tax laws two years ago. But the bill infuriated Republicans, who said the Democrats recanted on a promise to produce a bipartisan compromise.

Sen. Linda Evans Parlette said the proposal was disappointing, opened the door for more taxes in the future, and threatened some small businesses. Parlette and Kohl-Welles worked together on a seven-month study on the issue.

"We were promised a bipartisan collaborative approach to this issue," said Parlette, R-Wenatchee. "This is not a compromise bill. Negotiations have not even begun."

Two Democrats, Mary Margaret Haugen, of Camano Island, and Tim Sheldon, of Potlatch, voted against the measure. Pam Roach, R-Auburn, crossed the aisle to vote in favor.

Under the two-quarter approach made permanent in the bill, a nurse who made $40,000 for 12 months of work would receive the same unemployment benefits as a construction worker who made $20,000 for his or her six months of work. The formula determines a person's benefits based on the two most productive quarters of work, which, in the case of the nurse and construction worker, would both be $20,000.

Last session, Democrats passed a similar measure to temporarily implement the two-quarter system, just after the four-quarter average went into effect. That bill was to sunset in two years.

Republican lawmakers wanted to continue the state's push to determine benefits based on a person's entire year of work.

Seasonal benefits will help farmers, community college teachers and others who don't have full-year occupations.

Parlette said the new refunds, would suck the trust fund dry in an economic downturn.

Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Incentives could improve earthquake protection

There are opportunities to make California more earthquake-safe, according to the Institute for Business & Home Safety (IBHS).

At the recent meeting of the Little Hoover Commission, a state oversight agency that promotes efficiency, economy and improved government service, Harvey Ryland, president and CEO of IBHS, testified that "all levels of government have the opportunity to provide economic incentives for disaster prevention ... In exchange for such incentives, the local, state and federal governments would be gaining the economic sustainability of communities, and reducing the costs of responding to disasters," he said.

Ryland believes some of the opportunities to encourage disaster prevention include: excluding the value of disaster protection and related improvements from the calculation of real estate taxes, eliminating or reducing permit fees for the construction of a disaster-resistant structure, and giving that permit a high priority for expedited processing.

Without incentives, fewer actions will be taken, eliminating potential additional revenue, Ryland said. He also pointed out that should an event occur, state and local government will not only have to provide a greater level of service to the people whose homes and businesses were not protected, they will also risk losing any taxable value of properties that are destroyed.

"Any business that benefits from the stability and growth of a community could also provide incentives for structures with increased disaster protection," he said. "For example, mortgage companies should give preferential interest rates and/or closing cost discounts for construction loans, home improvement loans and mortgages." Similar federal programs, such as the National Flood Insurance Program, already exist, he added.

"We do know how to better protect people and property from earthquakes and other types of natural disasters. We also know how to educate the state's citizens, and that one way to motivate them to take action is through financial incentives," Ryland said.

The Little Hoover public hearing was held to ensure sufficient funding, accountability and incentives for improving emergency preparedness.

IBHS is a nonprofit initiative of the insurance industry that works to reduce the social and economic effects of natural disasters and other property losses.

New Mexico legislators adjourn with few insurance bills

New Mexico's 30-day legislative session, which ended recently, was predominantly focused on budget-related legislation. But a few insurance related bills were introduced, said the National Association of Mutual Insurance Companies (NAMIC).

NAMIC opposed The Medical Malpractice Joint Underwriting Association Act, HB 851, which would have mandated that liability insurance carriers, other than automobile, homeowners and farm-owner liability insurance, fund and participate in creating a Medical Malpractice Joint Underwriting Association to assist in improving availability and affordability of professional liability insurance for healthcare providers.

NAMIC also opposed Remedies to Victims of Identity Theft, HB 251, which would have amended current law on civil remedies and criminal penalties for identity theft, and would have created a provision to allow consumers to place a security freeze on their consumer credit reports.

Neither HB 851 nor HB 251 made it out of their respective house committees. However, NAMIC and members of the insurance industry expect both bills to be introduced next session and to be adamantly contested by the insurance industry.

According to NAMIC West Region State Affairs Manager Christian John Rataj, NAMIC opposed HB 851 because the bill:

• Required certain bodily injury liability carriers to contribute to the funding and operation of an association that is designed to address professional malpractice insurance, not bodily injury insurance;
• Adversely impacted market competition in the state;
• Could have led to increased insurance rates for consumers because they ultimately would have been the ones required to pay for the professional liability insurance subsidization;
• Would have required insurance carriers to use their policyholder surplus, which is set aside by carriers to ensure that they have the resources to settle claims, to pay the Medical Malpractice Joint Underwriting Association's annual assessments; and
• Failed to afford bodily injury liability insurance carriers with substantive and procedural due process.

"The security freeze provision did not allow for an 'insurance exclusion,' which is necessary for insurance carriers to provide timely and accurate insurance quotes to applicants," Rataj said. "Also, no provision was made that would allow insurance carriers the right to designate an application as incomplete if the consumer activates a security freeze that prevents the carrier from being able to thoroughly evaluate the applicant for insurance coverage."

Nev. Supreme Court ruling beneficial to state

A Nevada workers' union is praising a state Supreme Court ruling that upheld claims of 40 former state employees who sought more pension credits because their jobs were privatized.

The State of Nevada Employees Association added that the high court's 4-3 ruling recently, which went against Employers Insurance Co. of Nevada, makes EICON liable "for potentially several million dollars in back compensation."

The state turned its workers' compensation insurance agency into the private EICON in 1999, and the state workers who had worked at the agency became private-sector employees with no job security and reduced benefits, SNEA said.

Forty of those employees, backed by SNEA, sued when the new company would not help them purchase additional pension credits under a state law providing for such credits when an agency has to reduce its staffing.

Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Wash. approves anti-fraud unit, will protect privacy during investigations

Washington state officials have amended and approved legislation that would create an insurance anti-fraud unit in the insurance commissioner's office, according to the Property Casualty Insurers Association of America's (PCI) Northwest Regional Manager Kenton Brine.

"The Washington House Financial Institutions and Insurance Committee; the committee chair, Rep. Steve Kirby, D-Tacoma; and Insurance Commissioner Mike Kreidler, along with his staff are to be applauded for working out a compromise that will better protect consumers in this state against insurance fraud," Brine said.

The bill, Substitute Senate Bill (SSB) 6234, would create a state anti-insurance fraud unit, funded by insurer fees paid to the insurance commissioner's regulatory account.

The newly amended bill, which was unanimously approved by the committee and sent to the full House for further consideration, includes important changes sought by insurers and added by the House committee. The bill would increase the size of a proposed advisory board from 9 to 10 members, five of whom would be from the insurance industry. The board would make certain that the anti-fraud program is operating successfully and efficiently. It will also recommend whether the program should expand when it is eligible to do so after 2010.

Another provision of SSB 6234 would protect the privacy of information gathered from investigations. This protects the insurers conducting the investigations as well as whistleblowers from having their identities disclosed. Brine said the addition of this provision was critical to the future success of the fraud bureau, as insurers would have been less likely to participate in fraud unit investigations if it meant exposure to baseless lawsuits or inaccurate media coverage of fraud investigations. The provision was added to the bill by State Rep. Mark Ericks, D-Bothell, a former municipal police chief, who said he understood the need to keep investigation details protected from premature disclosure.

"Fraud costs insurance companies and our customers hundreds of millions of dollars, which adds hundreds of dollars annually to the cost of insurance premiums for every policyholder," Ericks said. "This legislation provides the tools and funding that prosecutors, law enforcement and insurance investigators need to not only catch perpetrators of fraud, but prosecute them under the law."

Calif. commissioner issues new workers' compensation regulations

California Insurance Commissioner John Garamendi has announced new workers' compensation regulations that will require all insurers in the state to submit certification forms that verify that claims adjusters and medical bill reviewers meet the new minimum standards of training and/or experience.

The new regulations, which took effect on Feb. 22, are designed to help speed appropriate care to injured workers and eliminate dysfunction that adds cost to the system. The new regulations complement the workers' comp reforms of 2004 and are a result of AB 1262.

"These measures will ensure that the people who process claims have the knowledge and experience to make sure that our injured workers are not harmed by needless delays within the system," Garamendi said. "This is the first time standards have been established for the handling of workers' compensation claims. It is yet another important step in the overall reform of California's workers' compensation system."

All workers' comp insurers, including insurance companies, self-insured employers and third-party administrators, must certify annually to the Insurance Commissioner on or before July 1 that their staff are trained, in training or qualified with experience that meets the standards required by the new regulations. For those who do not meet the experience requirements, training courses are required.

A complete summary of the regulations can be viewed at http://www.insurance. ca.gov/0400-news/0100-press-releases/0070-2006/upload/ SummaryofRegulationsandFrequentlyAskedQuestions.pdf

AIG severs ties with C.V. Starr; expands global energy unit, forms new unit

American International Group Inc. announced that its AIG Companies terminated the agency relationship with Starr Technical Risks Agency Inc. and its subsidiaries (Starr Tech), insurance agencies owned by C.V. Starr & Co. Inc.

C.V. Starr is run by AIG's own former chairman and CEO, Maurice "Hank" Greenberg. The parties have been in a court dispute over Starr's attempts to move its AIG business to other carriers.

According to AIG's announcement, all current and future underwriting, claims, loss control and administrative functions relating to accounts formerly underwritten by Starr Tech on behalf of the AIG Companies will be managed by New York-based AIG Global Energy, which already provides insurance and risk management programs to energy and energy-related companies worldwide.

AIG Global Energy has expanded its scope of operations by creating a new division, AIG Global Energy-North America, to serve the worldwide property insurance needs of insurance customers in North America.

Starr Technical is a managing general agency that specializes in oil and chemical industry insurance.

The AIG Companies also announced that it has formed AIG Specialty Excess, an umbrella and excess casualty underwriting unit that the company says will concentrate on insuring specialty and difficult-to-place classes of business including construction, transportation, public entities and educational institutions.

Effective May 15, 2006, AIG Specialty Excess will respond to all in-force business, as well as new and renewal business currently handled by the C.V. Starr & Co. agency, a subsidiary of C.V.Starr & Co. Inc.

Last month, a New York judge granted American International Group a restraining order against Greenberg and Starr Technical Risk Agency, that bars Starr from placing its AIG business with other insurers.

The order barred Greenberg's agency from pursuing contracts with National Indemnity, a Berkshire Hathaway unit, for business currently with AIG.

AIG has claimed that Starr Technical has been using "unauthorized" reinsurance agreements with National Indemnity to take business now placed with AIG and give it to other insurers. AIG maintains that Starr Technical and AIG have had an exclusive contract since 1992, which includes allowing Starr Technical to sell policies in AIG's name.

C.V. Starr has countersued charging that AIG is trying to keep its agency from competing. Its lawyers have accused AIG of trying to close down Starr agencies and urging clients not to do business with Greenberg's companies.

Former Gen Re, AIG execs plead not guilty to reinsurance fraud charges

As a federal probe into the insurance industry widens, four former top executives of giants General Re and American International Group are pleading not guilty to fraud and conspiracy charges.

The Justice Department has accused the four of orchestrating an audacious fraud, putting together a sham reinsurance transaction that allowed AIG to falsely report some $500 million in reserves against losses and thereby mislead shareholders, Wall Street and regulators.

The alleged conspiracy, using phony contracts and a secret side deal, was designed to make it appear that AIG's loss reserves were growing so as to inflate the company's stock price, prosecutors say.

New York-based AIG, one of the world's largest insurance companies, last month agreed to pay a record $1.64 billion in a settlement with federal and New York state authorities. It also apologized for having deceived investors and regulators with misleading accounting practices.

AIG was alleged to have taken part in bid-rigging schemes, paid secret commissions to insurance brokers to steer business to it, used phony insurance deals to burnish its earnings and misstated the amounts of workers' compensation premiums it had collected.

All four were entering pleas of not guilty and planned to contest the charges at trial, their attorneys say. Each defendant, if convicted on all 13 criminal counts of conspiracy, fraud and making false statements to the SEC, could face a maximum 95 years in prison and $7.75 million in fines.

They also are named in a related civil lawsuit by the SEC alleging that they aided AIG's alleged securities fraud.

The indictment stemmed from the Justice and SEC investigations of a five-year-old deal between AIG and General Re. Wide-ranging investigations of the reinsurance business are being conducted by authorities in the United States and elsewhere.

Prosecutors say AIG had been concerned about Wall Street analysts' suggestions that it had insufficient reserves to cover potential losses and approached General Re to facilitate a deal that would increase its loss reserves on paper. But the deal had no substantive value, did not transfer risk, and was designed to cosmetically alter AIG's books, according to the indictment.

Two other former executives of Stamford, Conn.-based General Re--John Houldsworth and Richard Napier--pleaded guilty in June to roles in the sham deal. As part of their plea bargains, they have been aiding the investigation.

Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

National Law Journal says top verdicts, punitive damages fall in 2005

The National Law Journal reported that the total amount awarded by juries last year in the nation's largest cases declined for the third consecutive year.

Based on analysis of the VerdictSearch Top 100, a ranking of the largest jury verdicts in 2005, the NLJ reveals that juries awarded just $8.2 billion in compensatory and punitive damages in these cases last year, the lowest total since the newspaper began tracking these verdicts in 2001 and a decline of 28 percent from last year's total.

Punitive damages also continued to decline significantly, in part due to caps that have now been implemented in more than half of the nation's states.

The total for 2005 contrasted sharply with the $41.4 billion in total verdicts, adjusted for inflation, reported for 2002, the peak total for the past five years.

Punitive awards continued to decrease at a much faster rate than compensatory awards--which, by comparison, have remained relatively constant. In 2005, punitive damages totaled just $3.5 billion, down from the five-year period's high of $36.0 billion in 2002. The punitive damages portion of total awards over the past five years has also dropped markedly. In 2005, punitives made up 43 percent of the total awards, down from the five-year period average of 59.2 percent and 2002 peak of 87 percent of that year's total.

"Judicial and legislative efforts to rein in out-of-scale punitive awards appear to be gaining traction, as more states impose caps and plaintiffs lawyers move away from arguing for large punitive damages which they know will be reduced or thrown out," said Rex Bossert, editor in chief of the NLJ. "In this year's second-largest case, for example, the trial judge reduced the punitive award by the jury from $700 million to nothing."

Last year's largest jury award came in the securities fraud case brought by Coleman, the camping gear company owned by Revlon Chairman Ron Perelman, against Morgan Stanley. In May, a Florida jury awarded Coleman more than $1.44 billion in total damages, including $850 million in punitives. An appeal is pending.

The types of cases that made the Top 100 Verdicts of 2005 varied greatly, from accounting malpractice to workplace safety.

Product liability was the most common cause of action, with 14 cases. Thirteen trials involved motor vehicle cases, 11 involved medical malpractice, nine were breach of contract and seven were intellectual property cases.

U.S. postal customers gain right to sue for tripping over mail, rules U.S. Supreme Court

The Supreme Court has ruled that the U.S. Postal Service can be sued by a woman who tripped over mail left on her porch.

The 7-1 decision revived a woman's claim that she was entitled to damages after suffering wrist and back injuries during the 2001 fall at her home in suburban Philadelphia. The letters, packages and periodicals were put on Barbara Dolan's porch instead of in her mailbox.

Justice Anthony M. Kennedy, writing for the majority, dismissed concerns of costly litigation. "The government raises the specter of frivolous slip-and-fall claims inundating the Postal Service," he wrote. "Slip-and-fall liability, however ... is a risk shared by any business that makes home deliveries."

Justices had been asked to interpret a federal law that bars lawsuits over the "loss, miscarriage or negligent transmission of letters or postal matter." The court said the law did not cover Dolan's claim.

The Bush administration told justices last fall that the Postal Service delivers about 660 million pieces of mail each day and would have a hard time disproving accident complaints.

Justice Clarence Thomas sided with the government. In a lone dissent, he said that personal injury lawsuits resulting from mail delivery should be prohibited.

Thomas said that under the law, the post office cannot be sued if a carrier negligently drops a package of glassware, and if the customer is cut by the shattered glass. It makes no sense, he said, for the court to allow that same customer to sue if he trips on the package. "There is no basis in the text (of the law) for the line drawn," he wrote.

Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Sarbanes-Oxley oversight board facing constitutional challenge

A group of advocates for free enterprise and limited government that includes former federal independent counsel Kenneth Starr is challenging the constitutionality of the Sarbanes Oxley Act and its provisions that govern the accounting of public companies.

The Free Enterprise Fund of Washington, D.C. filed a constitutional legal challenge to the Public Company Accounting Oversight Board (PCAOB) created by Congress as part of the Sarbanes-Oxley Act, which was enacted in 2002 following a number of corporate scandals. The SOX Act has been criticized by businesses, including insurers, for imposing new costs on publicly traded U.S. businesses.

The lawsuit claims that although the Sarbanes-Oxley Act purports to make the board a private entity, it delegates to the board vast governmental powers.

The complaint was filed in U.S. District Court for the District of Columbia on Feb. 7.

The complaint alleges that the PCAOB violates the Appointments Clause of the Constitution because it is composed of superior "officers" who need to be appointed by the President rather than the Securities and Exchange Commission.

The suit's broader claim is that the PCAOB violates separation of powers principles because its members perform an executive function but are not appointed or removable by the President or any executive branch entity. By giving the board unbridled authority to set standards regulating accounting firms and to finance its own operations by charging a fee to public companies, Congress violated the constitutional prohibition on delegating its legislative powers to an entity outside the legislative branch, according to the suit.

The complaint seeks an order declaring unconstitutional the provisions of the Sarbanes-Oxley Act.

Best remains negative on U.S., Bermuda reinsurance markets; expects no upgrades in 2006

Despite some premium gains during the renewal season, A.M. Best remains negative on the U.S. and Bermuda reinsurance markets. The rating agency doesn't think there will be any rating upgrades or positive rating outlooks assigned in 2006, as the "underlying stability of these markets remains tenuous."

Best said the "U.S. and Bermuda reinsurance sectors remain susceptible to pricing competition as investor expectations for double digit returns run high. Should the currently perceived market opportunities in property not be significantly realized, the companies that received much of the new capital that recently flowed into these markets might be forced to find alternative strategies."

The weather remains a problem. Best notes that "another active storm season in 2006 or further reserve development from the 2005 storms, as some are predicting, would be material and may help to prolong the hard property market, but at an additional cost to earnings and capital. The financial flexibility of some companies is already stretched with debt to capital for the industry at an all time high."

Equity capital, which flowed into the reinsurance market after Sept. 11 and in 2004, was also available in 2005. However, according to Best's analysis, another year of catastrophe losses could well "dampen investors' appetites for a stake in insurance and reinsurance holdings."

Reinsurance treaty renewals show some premium increases

With the January renewal season now behind them, the world's global reinsurers are collectively breathing a small sigh of relief. While premium increases in the U.S. met or exceeded expectations, especially along the stricken Gulf Coast, there were few, if any, increases in other parts of the world, notably in Europe.

Swiss Re posted a 7 percent improvement in economic profit and premium growth to $7.1 billion. Munich Re said its reinsurance treaty renewal premium volume in January was around $10.57 billion.

A.M. Best issued a statement acknowledging that the "significant losses from Katrina, Wilma and Rita incurred by reinsurers have only helped to halt temporarily the downward trend in the underwriting cycle prior to these events."

A shift in emphasis also helped boost premiums. Swiss Re said it had seen growth in property and specialty lines of around 6 percent while liability and motor lines were cut back by 10 percent. While its premium volume for European treaty business remained unchanged, Swiss Re noted a 13 percent decline in the U.S. "due to reductions in liability business." This was balanced by "solid growth of 23 percent in Asia, predominantly in the emerging markets."

Munich Re said the average increase may have been around 3 percent, however some regions, notably those hit by the 2005 hurricanes, paid a lot more for reinsurance in the "high two-digit figures" on average. The highest increases were in offshore energy, with up to 400 percent in some cases.

Best confirmed that most of the significant price increases were limited to business lines affected by the U.S. hurricanes. It indicated that European treaty business, which accounts for approximately two thirds of the renewals, saw relatively stable premium rates. Best expects a return of competition, provided that "underwriting results in 2006 turn out to be favorable."