The latest numbers released by the Spanish insurance association indicate that premiums in non-life lines have stayed relatively unchanged this year.

Some categories have posted an uptick, such as multi-risk property insurance and health lines. Some have fallen sharply.

Manuel Mascaraque Montagut, a Director at Unespa, the insurance industry association, noted for example that premiums at all risk construction lines were down 29.5% in the 12 months to last June. Other construction lines have fallen by as much as 41.5%.

The dramatic decrease in such lines is due to the slowdown in Spain's property market after its housing bubble burst.

But Mr Mascaraque noted that the insurance industry is suffering less than other activities in the country and that the general picture for the sector remains positive. “After applying the requirements to be imposed by Solvency II, the industry still has an excess of capital of over €12bn,” he said.

The fact that the industry remains healthy despite the struggles of the economy as a whole is mixed news for insurers as it means there is little pressure to end the soft market that has been going on for years.

In general, the speakers at the event agreed that the only realistic source of pressure on rates could come from the reinsurance market that has suffered severe losses due to the spate of natural catastrophes that hit the world earlier this year.

But any insurance salesman hoping to use this argument to hike rates would be disheartened by the presentation of Peter MacLean, the Director of Financial Services Ratings at Standards & Poor's.

He said that for all the hits taken by reinsurers this year the prospects for the sector are ‘stable’. Mr MacLean said that there have been some signs that the soft market is coming to an end but that reinsurers have kept their profits at good levels and look very much capable of absorbing even further losses.

“Despite the catastrophes that have taken place this year and in 2010, capitalisation still is at maximum levels,” he pointed out. “The reinsurance industry remains capable of weathering storms, both figuratively and literally.”

For the moment, however, the effects of the recent natural catastrophes have been felt most keenly by insurance lines affected by the events and in the countries in which they took place, said Juan Arsuaga, the CEO of Lloyd's Iberia.

“Prices have gone up and will continue to do so in areas affected by natural catastrophes,” he said. “But in traditional business lines, changes tend to be almost imperceptible, and rates will stay very competitive.”

One line that should not bring too much pain for insurance buyers in 2012 is civil liability, according to Santiago Martín, the Deputy Technical Director at Mapre Empresas. He said rates will go down next year as competition in this segment is very strong and insurers strive to draw new clients by offering lower prices.

The universe of potential clients is going down as a growing number of Spanish companies close their doors, he noted. But at the same time insurers have been able to present positive technical results because the slow pace of economic activity is keeping losses down, especially in sectors like construction. Civil liability losses have actually fallen by more than 20% in the year to June 2011, Mr Martín said.

As few people expect the Spanish economy to pick up in the near future, the scenario looks likely to repeat itself in 2012, he remarked. But Mr Martín also noted that the trend for civil liability could change if a number of factors combine with a hardening of the reinsurance market.

An eventual rebound of the economy, for instance, should push claims up. And insurers could feel tempted to employ the revenues obtained from civil liability lines to compensate for the poorer performance of other lines, he said.

One segment that is set to see a reduction of capacity and more restrictions to coverage in 2012 is D&O policies for executives of financial companies, according to José María Conde-Salazar, the Director of Financial Lines at Ace Europe in Spain.

This is not surprising considering the problems faced by Spanish banks at the moment, and Mr Conde-Salazar stressed that such coverage is still not much in demand by financial companies in the country.

He has identified the opposite trend among non-financial companies in Spain, with particularly healthy growth in the small and medium companies segment. Mr Conde-Salazar says that 25% of Spain's SMEs enjoy some kind of D&O protection and the number is firmly on the rise.

So the general D&O market is set to stay soft, he said, with the exception of some particular industries like construction that are seeing an increase in restrictions. Prices should also stay down for professional civil responsibility insurance, especially because competition is fierce.

“There are some new entrants that have no history of losses, which enables them to offer premium prices that companies that have been in the market for some years cannot match,” said Macarena Moreno, a financial lines underwriter at ACE Europe. “People say civil liability is a profitable line, but they forget that it also has a long tail. Claims take a couple of years to arrive, but they do arrive.”

For his part, Jordi Pozo, the Director of Transport at Generali in Spain, painted a gloomy picture for the transportation insurance sector, which has been facing lower rates and a persistent deterioration of technical results.

With economic activity struggling to pick up, the prospects for the sector in Spain look especially dire. “At some point the soft market will have to change. The current situation cannot last much longer,” he said. Mr Pozo stressed however that two years ago the sector expected a turnaround to take place by 2011, which has simply not materialised.

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