Hurricane Katrina and its effect on reinsurance rates will be the biggest talking point at this year?s Monte Carlo Rendez- Vous, according to a survey of delegates conducted by Reactions Magazine.

Respondents overwhelmingly indicated that the biggest hurricane to have hit the US in more than a decade will dominate discussions. They also believe it will lead to friction between reinsurers and cedants over rates.

Had the survey been carried out before last week, many respondents may have been talking about other issues such as regulatory probes and a softening market rather than rate hikes but the August 29 storm has clearly changed things.

?Hurricane Katrina and the return of the hard market,? said one respondent when asked what the biggest talking points will be. And most of the 103 respondents agreed.

Sixty five percent said they believe property reinsurance prices will increase in this renewal, most as a direct result of a combination of Hurricane Katrina and other catastrophe losses that have occurred this year such as the floods that hit Europe. Just 14 percent said they will fall and 21 percent said they will remain the same. ?The downwards trend will be stopped by the recent catastrophes in the US and central Europe,? said one respondent. Another added: ?The big boys will increase rates and the market will follow.?

The dent that losses from the hurricane will make in many reinsurers? capital was cited by many as a reason for potential rate hikes. ?Katrina will have a massive impact on reinsurers? capital, thus rate hikes are inevitable,? one respondent said.

Those that disagreed and claimed property rates will still continue to soften, argued that reinsurers still have too much capital even after losses from the hurricane have been taken into account. ?They will be tempted to use it to grab market share,? said one. When asked about how casualty rates will behave, however, the picture was less clear.

Thirty four percent of respondents said rates will increase, compared with 20 percent who said they will fall. Forty six percent said rates will stay the same. One respondent said:?The market is itching to compete for new business right now.? Others pointed to an increase in claims and court awards combined with the uncertain outcome of many regulatory probes.

?Losses in professional liability will drive the market up. I don?t think we have seen the end of major claims,? said a respondent.

Apart from catastrophe losses and Hurricane Katrina, respondents mentioned the fallout from New York Attorney General Eliot Spitzer?s probes as being another big topic discussion.

Several people mentioned terrorism exposure and rates, and a couple mentioned concerns about the financial strength of companies and whether Bermudian reinsurer Alea will be successful with its rights issue.

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