The tide may be turning for the long buyer-friendly commercial property market, particularly for catastrophe-exposed locations, risk managers, brokers and underwriters say.

Coming off the second-worst year on record in U.S. catastrophe losses, and buffeted by higher treaty reinsurance costs and the global economic downturn, insurers began trying to wrest increases in property rates early this year. They have succeeded to some extent, although the increases have generally not been dramatic.

But not all accounts are created equal and some observers say considerable competition remains for some middle-market accounts. Observers say the hardening, which peaked around the April 1 treaty renewals, may be subsiding.

“Pricing is flat on the average to small increases,” said Tim Rose, president of Liberty Mutual Group Inc.'s Liberty Mutual Property unit in Weston, Mass. “Catastrophe-exposed accounts probably are looking at some increases. Certainly, accounts that have poor loss histories or have issues with risk quality may also be seeing some increases on their programs.”

“It's been kind of remarkable period of suspended calm before the storm,” said Randy Schreitmueller, vp and manager-global services and market relationships at Johnston, R.I.-based Factory Mutual Insurance Co., which does business as FM Global. “The marketplace has stabilized. Decreases are no longer the rule, but general price increases still aren't quite the order of the day.

“The hardening market is taking more time to take root than most people anticipated earlier in the year,” Mr. Schreitmueller said.

“It's becoming more stable by the moment,” said Dan Loris, senior vp-property for Zurich North America Commercial in Schaumburg, Ill. “Directionally, the property market is moving to positive territory.”

“The middle and larger segments are definitely seeing positive rates with pretty good consistency,” with Fortune 1000 accounts experiencing increases approaching double digits while midsize businesses saw 3% to 4% increases, he said.

“I define it as a slowly rising tide in rates,” said Duncan Ellis, U.S. property practice leader with Marsh Inc. in New York. “You've got to really look at the marketplace in both catastrophe-exposed and loss-exposed (property), rather than just regular accounts that don't have those exposures.” Wind is a major issue, he said. “No one knows where they're going to be hit.”

“All rates are climbing,” said Mr. Ellis. “Perhaps the rate of increase on the excess is more so because it has been cheaper for longer.”

“Costs are going up for catastrophic risks,” said Al Tobin, national property practice leader for Aon Risk Services in New York. “We have seen a little bit of a trend where clients are buying less because they're trying to save a buck. It clearly is a developing trend.”

The rate increases “kind of plateaued post-April 1; for the toughest risks, double digits; it's north of 10%,” said Mr. Tobin. “I think there's still a lot of competition in the middle-market space for the noncatastrophic risks.”

Risk managers with property accounts renewing between April and July report a definite change.

“We went into the current market with the same players we've had since 1993. We've been very consistent,” said Scott Clark, risk and benefits officer for the Miami-Dade Public Schools in Miami. “As a result of that consistency, we were treated better than some of the other cat risks that may not have been as consistent in the marketplace.”

But being treated better did not translate into a flat renewal May 1. “We had $250 million in coverage the previous year. We had to drop it to $220 million because we couldn't get the $250 million. I was unwilling and my board was unwilling to spend any more than...$25 million” for catastrophe property coverage.

“With property values and business interruption significantly changing, our focus is more on rate than it is on premium,” said Brad Wood, senior vp-risk management for Marriott International Inc. in Bethesda, Md. “We find rates firmed up for the property market—particularly for the cat side of business. There's no doubt insurers are right-sizing their underwriting to offset their investment losses.” Mr. Wood said Marriott experienced “significant increases” for cat-exposed property when it renewed its program in the spring.

Accounts without cat exposures had a somewhat different story.

“Our rates were down significantly last year from the previous year due to the soft property market and good loss experience,” said Terry Fleming, director-division of risk management for Montgomery County in Rockville, Md. “This year, insurers seem to be pressing for increases because of losses and poor investment returns. Despite the market challenges, Montgomery County is experiencing a flat renewal for July 1.”

“The commercial property market is confused,” said Alexandra Glickman, area vice chairman for Arthur J. Gallagher Risk Management Services Inc. in Glendale, Calif. “The first five months of the year, we saw a definite hardening and there was an increased velocity in the rate of premium increases for Tier 1 wind and California earthquake, with Tier 1 wind being the more expensive” with increases of 15% to 40%, she said. But now, “The equity markets are no longer in a nose dive, and the balance sheets and the surpluses of the insurers are starting to stabilize. The ability to underwrite on a return-on-equities basis has improved for most carriers. The pressure on premium hasn't been eliminated, but it's starting to subside.”

That policyholder surplus remains healthy, even if down from its historic highs in 2007, helps explain the situation, a broker said.

“I think that a lot of people anticipated—(because of) cat losses, increased reinsurance costs, carrier ratings being under review because of new metrics caused by the investment losses...after the financial turmoil of September 2008—that the market was going to turn, something close to the post-9/11 or post-Katrina environment,” said Cliff Simpson, senior managing director and national practice leader for the property practice at Beecher Carlson in Atlanta. “What people didn't fully appreciate was how well-capitalized the property/casualty marketplace was.”