market by 20 to 25 percent by the end of 1995, a top executive said yesterday.

International Property Catastrophe Reinsurance (IPC Re) president Mr. John Dowling told a Bermuda Insurance Institute luncheon audience that he estimated the Bermuda cat companies wrote about $1.3 billion in premiums of the estimated $6 billion worldwide "cat'' market over the last 12 months.

"If you look at our example of $1.3 billion, that means that about $800 million of business flows into Bermuda around the first of January,'' he said.

He described the latest renewal season as having been disciplined, saying that Bermuda's rate has grown not only as a major participant in the world cat scene, but also as a major market leader.

He dismissed year-long criticism that the new Bermuda capacity would drive prices down, saying there has been no evidence of that through the latest renewal season.

Mr. Dowling said it was not unusual that the renewal season was late, but there were some specific reasons why it happened this year.

"Rates were at or very close to historic highs, following all of the claims of 1987,'' he said. "There was one major claim in 1994, the Northridge earthquake, but it was a big one, now estimated to cost the insurance industry between $10 billion and $12 billion.'' He said that there has also been a greater attention by insurers to the catastrophe risks that they run and greater concern by insurers over the quality of their reinsurers.

There has been an increased use of modelling techniques to forecast the likely outcome of catastrophic events and more evidence that reinsurers around the world are more prepared to utilise capacity.

"One of the features noticeable throughout 1994, even though in January there was this whopping big claim, everywhere I went throughout the world, every single insurer I met expected their rates to go down 10 to 15 percent by December 31.'' It was as a result of that expectation, he said, that insurers waited for a better deal.

"No-one wanted to be the first in the market. It doesn't matter which market we are talking about, the US, the UK, Europe, because everybody had an expectation. There seemed to be some sort of fear about being the first to set the benchmark.

"And people got later, and later and later. And in the end everybody knew that to place $200, $300, 400 million dollars worth of cover takes time.

Eventually at the end of November, the beginning of December everybody flooded into the market and we had this huge logjam of people looking to buy.'' Mr. Dowling also said that in 1994, local cat companies did not form part of the pricing consensus for the markets. Most had come in to fill some of the lack of capacity, while being careful not to destabilise the market.

But the second season, the companies decided to become part of that rating process.

He said the three core elements to the rating of the product include the exposures run by the insurers, their claims experience and the supply of capacity versus demand.

He said of the US: "In 1994, many insurers suffered claims, not only from Northridge, but to a lesser extent from the terrible winter conditions that prevailed in the Northeast of the US.'' Where clients had suffered claims, rates rose between five and 40 percent, depending on the severity of losses.

Mr. John Dowling