Global re/insurance rates should be increased in a “measured” way over the next six months to avoid any kneejerk reaction in the market.That is according to Catlin Group CEO Stephen Catlin who said that rises in “the order of 10 to 25 percent, depending on the class of business” should be sufficient as the 2011 catastrophes had affected earnings rather than the re/insurers’ capital.According to a report in Insurance News, Mr Catlin, who was visiting Australia to speak at the Steadfast Convention in Melbourne, said that with total industry losses for the year to date of between $50 billion and $70 billion it was unrealistic for brokers to expect no change in rates.“To suggest that’s not market-turning is a bit strange,” he said, adding that last year many in the sector were claiming that $50 billion in losses would be enough to drive up rates.Mr Catlin said that an over-reaction - defined as rate increases in the order of 50 percent such as those witnessed after the September 11 attacks - would be bad for both clients and the industry.He said that pricing in Australia and New Zealand had been “very low” in recent years and while rates in the catastrophe-affected regions would rise because the same capital pool is used to fund catastrophe risk globally, it was inevitable that increases would be global.Mr Catlin said that price increases would also impact the casualty market, with pricing in certain classes “increasingly unsustainable” and casualty rates on par with 1999 - “the worst underwriting year I can remember”.“There is an air of inevitability that sometime there has to be a price correction (in the casualty market) as well,” he said.Mr Catlin said that the low interest rate environment further strengthened the case for rate increases because investment income would not provide the cushion it had in recent years. He predicted that 2011 would be the “worst” year in recent times as far as investment returns were concerned.But he added that if the looming US hurricane season provided further major catastrophes everything would change.“If there is another $25 billion worth of cat losses this year there will be a knee-jerk reaction,” he said.Mr Catlin said that fears were growing about the possibility of a correlation in the recent earthquake activity globally and, therefore, about the potential for an earthquake in California.He says many businesses would be reassessing their earthquake and tsunami-related property/catastrophe exposures for the US west coast, and rates in that area were “bound to rise”.