ST. PETERSBURG, Fla.-Property insurance markets may be stabilizing ahead of casualty markets, but buyers of property coverage still face a market environment that requires hard work to get the best price and capacity.

"We're starting to see a break in the very bad pricing trends of the last couple of years," said Anne K. Anderson, managing director, property and international practice at Marsh USA Inc. in New York.

Speaking as part of a panel on the property market at the American Bankers Assn.'s Insurance Risk Management Annual Conference and Meetings earlier this month in St. Petersburg, Fla., Ms. Anderson said that price increases averaged 80% through 2002. But Jan. 1 renewals saw increases in the range of 10% to 20%, she said, with some critical sublimits being increased. "In some cases, we're actually seeing a flat renewal," Ms. Anderson said.

There's also "the beginning of a feeling of slight competition" on higher layers, she said.

Available capacity is increasing somewhat, in part because of new capacity in the London and Bermuda markets. "The new Bermuda markets have become real players, particularly in first excess layers," Ms. Anderson said.

But Kenneth I. Johnson, assistant vp, corporate accounts underwriting at Zurich North America Financial Enterprises in Baltimore, said buyers are still facing tighter terms and conditions in insurance programs.

"Manuscript wording, for instance, is going to be very much restricted," Mr. Johnson said. Insurers are concerned about broad and nebulous policy wordings "and really not knowing what their exposures are," he said.

"Previous assumptions of availability and affordability are seriously being challenged," Mr. Johnson said. "The bottom line is, we have to achieve some sort of collective correction of the market."

"Quite frankly, it's been very difficult to put together programs," Mr. Johnson said, though "I think the biggest hit was last year."

For buyers, a key to dealing successfully with the current property market is presenting the best "story," Ms. Anderson said.

"Information remains critical, and developing the best story for the market is required" to get the best price and capacity, she said. "A well-thought-out story will maximize capacity, sublimits, and minimize price."

Mr. Johnson said that submissions should focus on construction, occupancy protection and exposure. And appraising property and including information from inspections and surveys also can be helpful, he said. "Anything you can do to tell the story is going to improve the bargaining power you have relative to your insurance program."

Underwriters also are interested in seeing buyers' business continuity plans, Mr. Johnson said. "Basically, what we're trying to do is, No. 1, determine that you have one; No. 2, that it's been well thought out, and; No. 3, that it's been implemented," he said.

"I think the best approach you can take is establishing and strengthening relationships with your underwriters and brokers," Mr. Johnson said. Such relationships will facilitate the flow of information that will produce the most favorable outcome in buying property coverage, he said.

Another panelist, Gerard M. Kelly, assistant professor of risk management in the Tobin College of Business at St. John's University in New York, also advocated such relationships. "There's no one who knows your risk better than you," he said.

"Underwriters want to know what is going to happen if you have a severe fire loss. What is your extra expense going to be? How much is that going to cost us?" he said.

Ms. Anderson said that when buyers still find themselves facing a sizable rate increase, "the first line of defense...is to take a larger retention." She conceded, though, that such an option wasn't always viable.

Understanding maximum foreseeable loss is an important part of determining how much risk a company can take and how to deal with it, she said.

Companies with multinational exposures might also be able to gain some price advantage by carving out some local coverage if they can find lower-priced capacity available locally for low layers that can be overwritten by the company's global program, Ms. Anderson said.

Another challenge facing property insurance buyers is whether or not to purchase terrorism coverage. "Cost on terrorism has shown wide swings. Markets are clearly struggling with pricing on this peril," Ms. Anderson said. An additional challenge for banks is that "financial institutions are skewing on the high end of cost" for terror coverage, she said.

Captives should be another part of buyers' strategy, Ms. Anderson suggested. "If you don't have one, this is the time to evaluate whether one is right for you," she said.