A major hurricane striking the US this year could have a 9/11-style impact on the re/insurance industry, coming on top of massive first-quarter catastrophe losses.That is the view of John Charman, chief executive officer of Bermuda re/insurer Axis Capital Holdings Ltd, who said the Bermuda market would be well placed to benefit from such a market dislocation.Mr Charman, who formed Axis in the aftermath of the 9/11 terrorist attacks in 2001, said he had already seen a momentum swing towards higher reinsurance rates after earthquakes in New Zealand and Japan this year.“What we’re talking about with the catastrophe activity that we’ve witness so far is a market change, a cyclical change,” Mr Charman told The Royal Gazette in an interview. “So it’s driving an exit from the low part of the pricing cycle. This is not another 9/11.“If there was a major hurricane in the Gulf of Mexico this year, it would be a 9/11 event to the industry, because of the compounding impact it would have on top of the previous earthquakes.“The reality of what we’ve seen in 2011, is a substantial erosion of profitability. It’s really not a capital event. If on top of what we’ve experienced, we have a major hurricane, then it becomes a capital event - and that is an industry-changing event.“That will bring substantial changes to the industry, very quickly on a global basis. That’s where Bermudian companies are best equipped to prosper from those sorts of circumstances. We’re well managed and well capitalised, have extraordinary expertise and we’re very agile.”Industry experts have mixed views on whether the combination of February’s quake in New Zealand and March’s earthquake and tsunami in Japan will have any more than a regional impact on a market. Mr Charman is adamant that the market as a whole is turning toward higher rates.“First I must say that Japan was a terrible tragedy and I feel the deepest sympathy for the Japanese people,” Mr Charman said.“In our industry, after having had about $35 billion of catastrophe losses in 2010, the underwriting side of the business managed to do well. But the assets side of the balance sheet, which is critical to so many companies in our industry, is under enormous pressure because of low interest rates and low investment returns.“So going into 2011, and facing underwriting conditions that were aggressive and extreme in terms of price competition was always going to be difficult.“Then, having a second New Zealand earthquake of around $10 billion and then a Japanese disaster of about $20 billion to $30 billion was really, I think, the straw that broke the camel’s back. I think it is market-changing, contrary to what a lot of people will say. I believe the reinsurance market is reacting and will react positively and is changing the momentum away from price reductions to price increases. I believe that will spread through to the primary insurance market on a global basis.”Much of the debate about the earthquakes’ impact on the market centres on the industry’s abundance of capital and whether the first-quarter claims will wipe out a sufficiently high amount to force higher rates.Axis chairman Michael Butt believes the industry has enough capital to handle a major hurricane on top of the quake losses.“Some would say that industry was overcapitalised by $80 billion to $90 billion at the beginning of 2010,” Mr Butt said. “We’ve lost $50 billion of that, maybe $55 billion, through recent events, but we’re still well capitalised. At a superficial level, in the short-tail book at the moment, there is enough capital to deal with a major hurricane. But it would be an extra turning event.“I could make an argument that the industry is actually undercapitalised for the risks that we are seeing exposed. We’ve actually got a mismatch between demand and supply - demand isn’t as strong as it should be. People don’t realise the size and costs of the risks they’re sitting on.”Mr Charman said that over the past five or six years, underwriters had been under substantial price competition, and had been giving reductions year after year. Even before the recent earthquakes, he had publicly predicted an upcoming turn in the market.“I stood up at a conference in New York in February, just before the New Zealand earthquake and said that, in my view, the market would turn in 2012, because I have noticed over the last four or five months signs of the market becoming quite tired of the relentless pressure to reduce pricing and actually beginning to move in a different direction.“The imposition of the New Zealand and Japanese earthquakes and potentially $40 billion to $50 billion on top of it, it’s inevitable now that underwriters will actually charge higher prices.”