Hurricane Katrina and hurricane Wilma have temporarily halted the decline in rates in the insurance industry according to Gallagher Re president David McManus.

?I think hurricane Katrina and hurricane Wilma will be viewed as a temporary stabilising impact. Those events have stopped rates declining and put a stop on the slide to further softness but I still think we are still in a soft market,? Mr. McManus said.

?Despite those losses global reinsurers have continued to report positive underwriting results in 2005. There has been horrific losses to individual events but the major insurance companies in the US will be reporting positive underwriting results and increases in capital and surplus.?

Consequently he said there will be more disciplined underwriting in any area of distress and those companies providing coverage to coastal property or areas devastated by the storms can expect a tough market.

?I think competition will continue to drive prices down, may be not as fast as they have fallen in the past, so there will be a soft market through the rest of this year and into next year.?

Mr. McManus said the big question on trends in the market are focusing on what the rating agencies are going to do.

?The rating agencies are trying to avoid downgrading when its obvious, closing the door after the horse has bolted. There is no doubt capital adequacy tests are going to be tightened.?

?If the agencies continue to raise the bar for what is required for financial standing to be awarded a AM Best A- rating that will help put some control on competitive underwriting.?

Mr. McManus said most of the new reinsurance companies have achieved a rating but they have been subject to quarterly reviews by the rating agencies.

?I think that is good thing because that will help ensure discipline in underwriting but a number of the business plans of the new capacity will need modification,? he explained.

?To be a viable business operating in a dynamic market and to give investors the best returns, you have to change your plan to take advantage of the best opportunities that present themselves.?

Mr. McManus said if those companies diversify from their original lines of business it will have to make business sense otherwise they will be subject to review by the rating agencies.