LUXEMBOURG—Captive insurers have a rare opportunity in an insurance market that is hardening not because of rising rates, but from stricter underwriting and tightening terms and conditions, experts say.

“There are different ways for the market to harden,” said Martine Hecq, manager of special lines and captive tools at Paris-based energy company GDF Suez S.A. “Underwriters are much more concerned about remaining within their underwriting guidelines. That is a way for the market to harden,” she said during a panel discussion at the 12th European Captive Rendezvous in Luxembourg earlier this month.

“The hard market is not only about premium rates,” said Marc Germeau, Zurich, Switzerland-based director, senior client manager at Swiss Reinsurance Co.'s Industrial Risk Insurer unit. “It's also about terms and conditions. There are some changes and this is a sort of market hardening in my view.”

Ms. Hecq said captive insurers are useful not only for maintaining stable rates but in keeping terms and conditions consistent despite market conditions. “I take this as an opportunity,” she said of underwriters' tendency to change policy wording. “I see an opportunity for captives to get into the loop for major placements for our companies.”

It is unlikely that rates will shift enough to prompt captive owners to send more business to those vehicles anytime soon, the panelists agreed.

Pierre Cambier, general manager with Royal Sun Alliance (Global) Ltd. in Brussels, Belgium, pointed out that most insurers are watching their capital decline. “So they are looking for cash. I think there is a consensus among most insurance companies that we are at the end of the soft market.” Still, he said, “we haven't seen much of a hardening market.”

Mr. Germeau said the financial crisis has hammered insurers on the asset side and large equity losses might lead to a spike in insurance rates if circumstances were different.

“One of the reasons why there is not a brutal hardening of the market is because of the state of the economy and this sort of downturn where the demand for insurance is decreasing,” Mr. Germeau said.

Other factors that have kept the market relatively soft are respectable insurer combined ratios and low inflation, Mr. Cambier said. “Unless there are major cat losses coming or a worsening of the financial situation worldwide, I'm not sure that the market will significantly harden in the coming months,” he said.

That's a general statement, he said, because certain lines have seen higher rates. “Obviously, credit insurance is in terrible shape,” Mr. Cambier said. “The cat market has increased and will probably continue to increase. But I think for the property/casualty market, for normal exposures, we will see sort of a flattening market” if catastrophic losses remain low, he said.

Tomas Wittbjer, Luxembourg-based global head of insurance at IKANO S.A., which provides insurance services to furniture retailer IKEA Group, said he has seen evidence of firming prices for catastrophe-exposed property insurance.

IKEA has a large property exposure and its coverage costs increased 15% at renewal in May, “I suppose mainly due to the cat exposure,” Mr. Wittbjer said. “For me, there is a sort of a hardening of the market.”

Mr. Germeau said reinsurance rates have generally risen 5% to 10%.