Insurers and reinsurers are nervously watching the weather in the Gulf of Mexico after Hurricane Iris hit the area. They are concerned a major storm could cause critical claims on their weakened reserves.

FM Global executive vice president Ruud Bosman told Insurance Times at the Federation of European Risk Management Associations (Ferma) forum that the industry would be relieved when the US storm season ended.

"The hurricane season runs until mid-November," he said. "It's really a concern about the next event that could be coming."

Hurricane Iris, classed category four after reaching 140mph, swept across the Caribbean, hitting Jamaica, the Dominican Republic, Belize and central America and causing structural damage and massive flooding.

Group director of underwriting and claims at Royal & SunAlliance, Rick Hudson, said the first-line reinsurers hit by the World Trade Centre tragedy would not necessarily be dragged down by a second massive hit from a natural disaster.

He also predicted some reinsurers would pull out of the property sector, but said most would hang on.

His worry is that smaller, second-tier insurers may collapse because the pool of money will dry up.

"Anyone highly reliant on reinsurance, but who has poor relationships or poor results with their reinsurers and hasn't got the capital may not trade out of it [a second major hit to the market], but it's not going to be a problem for the big insurers."

"The issue is that second-tier insurers still draw water from the same reinsurance pond as first-tier insurers and they might find it difficult to get reinsurance capacity," Hudson said.

GAB Robins' director James Peace said the company's catastrophe coordinator Danny Tyler was liaising with GAB's North American catastrophe team, based at Fort Lauderdale, and would send UK experts if requested.

He said US insurers were waiting anxiously to be able to ascertain the severity of the hurricane.

"If you look back, other than the events on September 11, the major events in the US property market have been hurricanes," Peace said.

"They've been really big losses, so I'd think the market would be on tenterhooks over there."

Cunningham Lindsey's marketing director Ben Price said the firm had mobilised staff from its Puerto Rico, Columbia and Mexico City offices.

He said initial reports claimed Belize City had been spared the full force of the hurricane's winds. "Insurers will be delighted with that news, as this is principally where all the insured property is located. However, heavy rainfall of between five and eight inches hit the city, so damage will be caused by flooding," Price said.

Once Iris veered off into Central America, the wind died down because of a change in altitude caused by the mountainous terrain. But the rains continue to flood the region. Price said Guatamala City might be the biggest casualty, as it was prone to mudslides.

Bosman said insurers were relatively optimistic despite the attack on the World Trade Centre.

"Although this has hit us hard, we're confident we'll come out of it," he said.

He estimated reinsurers would bear at least 75% of the loss, at a time when they had not posted good results for some years.

"Insurance companies will focus on their ability to buy reinsurance," he said.

"If they can't buy appropriate reinsurance, they'll change their products.

"They'll limit liability, especially in catastrophe-prone areas, and they'll make sure the accumulation stays within the scope of their own balance sheet."

Bosman said insurers would also study the financial stability of reinsurers even more closely.

"Insurance companies will be looking very carefully at the ratings of the reinsurance companies to make sure they have the ability to pay out if they need to," he said.

He said it was impossible to rule out the introduction of a Pool Re-style operation in the US.

"You can't expect private capital to finance terrorist cover on an ongoing basis," he said.

FM Global is a mutual which concentrates on large commercial property business.