INSURANCE premiums are poised to fall for businesses as the industry recovers from losses following catastrophes such as the September 11 terrorist attacks, a broker has claimed.

Commercial and corporate clients are in a strong position and should start to reap the benefits soon as insurance providers begin to compete for new business.

Brian Jackson, commercial director of Darlington-based independent insurance group BiB, said the industry had left behind the so-called "hard market" which followed the attacks on New York, the collapse of the stock market, the growth of a compensation culture and the folding in 2001 of commercial specialist Independent Insurance Company. He said: "When times are tough, as they have been for the last few years, insurance companies lose money. They become very selective about the business they have and increase their rates.

"The industry tends to run in five-year cycles. The cycle after September 11 was the hardest we had seen. There was a kneejerk, over-reaction to it with, in some cases, premiums going up 300 per cent."

Now the industry is back into a "soft market" - good news for businesses with property assets, such as hotels, factories and owned offices who can expect reasonable premium reductions.

Mr Jackson, who is also chairman of Darlington Business Club, said: "Insurance companies have returned to profit quicker than expected and, as soon as that happens, they are back looking for market share. It just takes one insurer to start buying new business for the market to go soft."

But he warned there was a shadow hanging over the good times for insurance customers, with the effect that Hurricane Katrina will have on the industry not yet known.

However, Mr Jackson said: "While Katrina was a devastating event for those directly involved, it was a relatively localised disaster, like Boscastle or Carlisle here. When a disaster happens, it doesn't necessarily drive up insurance rates unless it's truly calamitous for the worldwide economy."