Bermuda's commercial insurers are eagerly awaiting a rise in rates - but the latest industry data shows little evidence of that happening in the first quarter of this year.

The RIMS Benchmark survey, released this week at the Risk and Insurance Management Society (RIMS)Conference in Orlando, found that rates in most lines were generally slightly lower than a year ago.

The one outstanding exception was directors' and officers' (D&O) liability cover for financial institutions, which rocketed by 37 percent in the first three months of this year, compared to the same period in 2008.

Insurance industry analysts Advisen, who carried out the survey for RIMS, found that the average D&O premium rose three percent. But when financial institutions were excluded from the equation, renewals fell three percent.

Greg Flood, president of IronPro, the US professional liability unit of Bermuda-based insurer Ironshore, corroborated the survey's findings.

"There's a dichotomy in the industry in D&O and E&O (error and omissions) lines," Mr. Flood said, while manning Ironshore's first-time booth at RIMS.

"The financial institutions - basically any organisation impacted by sub-prime or the credit crisis - are experiencing significant rate increases and in some cases there is a diminishing of available limits. Also companies that are leveraged are feeling it.

"For companies not involved with these problems, rates are pretty much stable, with a range of plus or minus two percent."

A wave of litigation has stemmed from the sub-prime mortgage crisis, which is expected to lead to billions of dollars of claims, mostly for legal defence costs. More claims are in the pipeline from the effects of Bernard Madoff's $65 billion Ponzi scheme and smaller cases such as that involving Allen Stanford.

Mr. Flood estimated the insurance industry could face losses of between $10 billion and $11 billion from such claims.

Mason Power, managing director of Advisen Europe, said Advisen's trawling of data across the industry suggested total D&O and E&O losses of around $9.6 billion in claims emanating from the events of 2007 and 2008.

"One of the factors that will keep that number down is that one company, even if it is sued several times, only has one limit per policy," Mr. Power said.

AIG, Ace, XL Capital and the Lloyd's market would feature strongly among those facing the bulkiest claims, Mr. Power added.

Advisen executive vice-president Dave Bradford expects to see a very gradual hardening market developing going into 2010.

In a statement accompanying the RIMS survey, Mr. Bradford said: "Insurers struggle against falling rates, increased losses in some lines and sharply lower investment income due to the credit crisis, but the commercial insurance industry is still over-capitalised.

"We expect to see a favourable pricing environment for risk managers through 2009."