MONTE CARLO, Monaco—Property catastrophe reinsurance rates, which already increased at April, June and July renewals for some catastrophe-exposed programs, are expected to increase again at Jan. 1, 2012, renewals.

While rate increases have been and likely will continue to be seen for accounts that suffered losses in the series of natural catastrophes this year, loss-free business may see rates remain stable or rise only slightly, experts say.

The impact of recent revisions to catastrophe models, particularly Risk Management Solutions Inc.'s updated U.S. hurricane model, also may be felt by accounts renewing at the start of 2012, with the increased loss exposure for cedents resulting in increased rates for some property cat business, sources said during the Rendez-Vous de Septembre gathering of the reinsurance industry.

“You look back at the beginning of the year, and we were looking at a long soft market,” said Bill Pollett, chief corporate development and strategy officer for Hamilton, Bermuda-based Montpelier Re Holdings Ltd.

Instead, midyear renewals resulted in price increases of 10% for catastrophe-exposed property business, he said.

At the June and July renewals, U.S. windstorm-exposed business saw rates increase an average of 7% to 12%, said James H. Veghte, CEO of reinsurance at Hamilton, Bermuda-based XL Group P.L.C.

The market is in an “interesting time with the capital being eroded by the events we had this year,” said Stephen Young, executive vp of Pembroke, Bermuda-based Endurance Specialty Insurance Ltd.

“We will see some price increases” at the Jan. 1, 2012, renewal period, Mr. Young said. He said prices probably will increase in the single-digit range, perhaps slightly more in the United States, and that the new RMS model will be a “significant driver” of reinsurance pricing during the next renewal cycle.

In Europe, reinsurers are still trying to judge client reaction to the new RMS Europe windstorm model, he said. He expects European prices to rise, although not to the degree they probably will in the United States.

Accounts that experienced losses likely will see higher rates early next year, said Patrick Hartigan, team leader of reinsurance at Beazley Group P.L.C. in London. A combination of the losses experienced this year and model revisions likely will mean there are some rate increases for catastrophe-exposed cedents early next year. Those increases are likely to be in the single-digit range, he said.

North America has seen a large number of attritional property losses, and the impact of the RMS hurricane model on pricing likely will be more marked on Jan. 1, 2012, than it was on June 1 and July 1, when insurers had not fully digested its implications, noted John D. Daum, executive director of Lockton Re L.P. in New York.

But outside of U.S. coastal areas, markets are still competitive, he said.

“The market likely will remain flat at Jan. 1,” Mr. Daum said.

The property/catastrophe reinsurance sector began the year with about $20 billion in excess capital, said David Flandro, London-based global head of business intelligence at Guy Carpenter & Co. L.L.C. “We think that there have been about $75 billion of insured losses, many of which were reinsured,” he said. This would mean that the reinsurance sector lost about 5% of its capital as a result of those losses, he explained.

Business that renewed on June 1 saw average rate rises of 5% to 10% for property catastrophe coverage, while business that renewed July 1 saw rates that ranged from flat to 10% higher, he said.

But Jan. 1, 2012, is not likely to see a “thumping hard market,” in the absence of any further catastrophes, Mr. Flandro said.

If there are no large catastrophes during the second half of this year, then “we could experience some drift” of prices downward, he said.

“We would certainly expect property catastrophe rates to go up at the year-end,” said Stephen Catlin, CEO of Catlin Group Ltd. And another major catastrophe by year-end likely would lead to significant rate increases, he said.

“We talk to our clients and we say that the increased frequency and severity of natural catastrophes has to be compensated in terms of pricing,” said Victor Peignet, CEO of the property/ casualty operations of Paris-based reinsurer SCOR S.E.

Heavy first-half catastrophe losses mean that reinsurers need to increase rates for catastrophe-exposed business, said Ulrich Wallin, CEO of Hannover Re Group. At the beginning of the year, reinsurers were trying to keep rates stable, but the Japanese earthquake started a move to increase rates on catastrophe-exposed business, he said.

Increases vary from “modest to quite significant” in loss-laden areas, he said.

At the July renewals, catastrophe-exposed U.S. property business saw rate hikes of about 10% to 15% on average, and similar or higher increases are expected at January renewals, said Michael Pickel, a member of the executive board of Hannover Re in Hanover, Germany.

Programs with losses in New Zealand saw “rather dramatic rate increases”—with prices doubling or tripling in some cases—for midyear renewals. In Japan and Australia, loss-affected business saw average rate hikes of 50%, Mr. Wallin said.

Dominic Simpson, a vp and senior credit officer with Moody's Investors Service Inc. in London, told a news conference during the Monte Carlo, Monaco, gathering of the reinsurance industry that catastrophe property prices for some areas—such as Japan and New Zealand, which suffered large earthquake losses—rose 100% in some cases during the recent renewals.

“Prices will go up,” he said

Property catastrophe rates in Australia and New Zealand, which were hit respectively by floods and earthquakes, increased “tremendously,” said Bryon Ehrhart, chairman of Chicago-based brokerage Aon Corp.'s Aon Benfield Analytics and Aon Benfield Investment Banking Group.

Further rate increases are likely for property catastrophe business in Japan, Australia and New Zealand early next year, said Dennis Sugrue, a director at Standard & Poor's Corp. in London.

But sufficient capacity in the reinsurance market means that the losses in Australia, Japan and New Zealand likely won't result in Jan. 1, 2012, rate hikes for companies that do not have cat exposures in those regions, Mr. Ehrhart said.