More than two months after it struck the Northeast, Superstorm Sandy continues to affect the commercial property/casualty insurance market.

The market had begun to flatten before the October storm — which caused as much as $25 billion in insured damage — but that has been reversed to a certain extent. But the increases haven't been overly dramatic, observers say.

The event has led insurers to look more closely at terms and conditions, while rates have increased modestly for many accounts, observers say. Insurers also are paying more attention to flood exposures.

“The general mood before Sandy was rates were flattening even on tough (catastrophe) accounts,” said David Finnis, property practice leader for Willis North America Inc. in Atlanta. “Post-Sandy, we're still able to get flat to minor increase in rate on some of the cat accounts.”

“Sandy didn't cause a cataclysmic sea change in rates,” said Randy Schreitmueller, a vice president at Johnston, R.I.-based FM Global. “It did help solidify rates, particularly for accounts that are exposed to these types of catastrophes, especially in the Northeast. But it's still a competitive world out there.”

Duncan Ellis, U.S. property practice leader at Marsh Inc. in New York, divided the market into four segments. Noncatastrophe-exposed risks experienced rates ranging from down 5% to up 5%, while accounts with moderate catastrophe exposures — with 1% to 30% of their value exposed to catastrophe zones — experienced flat to 10% rate increases, he said. Heavily catastrophe-exposed accounts had rate increases of 5% to 15%, while “loss-driven” risks with either catastrophe losses or repeated noncatastrophe losses experience renewals of flat to up 15%, he said.

%%BREAK%%

“The change we're seeing is anything that was affected by Sandy with a large loss — those accounts are being adjusted upward. And, more importantly on those types of accounts, they're really taking a look at the terms and conditions,” said Mr. Finnis. “A lot of the insurers found themselves with very large limits and very low deductibles for Sandy.”

“Pre-Sandy, everybody was warning us of a lot of pressure on the reinsurers and insurers to move rates downward,” he said. “That pressure is going to be off of them.”

“There's been rate pressure all year; we saw it kind of plateauing, getting down to the lower single digits before Sandy,” said Alfred Tobin, New York-based managing principal at Aon Risk Solutions' property practice. “Now, today's guidance is there is general pressure on rates, more pressure on those with Sandy claims.”

He said customers are learning the interpretation of their deductibles, and insurers are underwriting Northeast wind much more diligently.

“Rates are less of an issue — it's more terms and conditions impacting wind and flood,” said Alexandra Glickman, area vice chairman of Arthur J. Gallagher Risk Management Services Inc. in Glendale, Calif.

“There's a tremendous amount of capacity — Lloyd's of London for 2013 is nearly £25 billion ($40.18 billion),” she said.

Capacity is still “ample,” but underwriters are starting to become a little stingy on flood capacity, said Marsh's Mr. Ellis. Sandy “put the microscope on flood issues,” such as whether Tier 1 should be extended north, and thus subject to higher deductibles.

%%BREAK%%

“Some carriers who were putting up massive limits got thumped, and I think that particularly in commercial real estate there will be greater emphasis on shared and layered primaries,” said Ms. Glickman.

There's no major deviation by class of business industrywide, said Neil Zonfrelli, senior vice president and product manager-property at Liberty Mutual Insurance Co. in Boston. “Obviously, the Northeast, given Sandy, is being hit a little bit harder. People are really looking at terms and conditions.”

The property line is still in need of rate increases, but there have been no big jumps, said Mike Halvey, head of middle markets for Zurich in North America in Schaumburg, Ill. As a result of recent storms — Sandy in 2012 and Hurricane Irene in 2011 — the Northeast will come under increased rate pressure. The rest of the country is expected to remain consistent with 2012 rate gains, but “I wouldn't envision any big spikes.”