A perfect storm of declining sales, increasing claims and no way to recoup investments during a down economy has hit the property and casualty insurance industry hard this year.

That will mean increased rates for businesses and a buyer’s market left blowing in the wind.

It’s humbug news for 2012.

“It won’t go up dramatically Jan. 1, but as negotiations play out over the next year to three years, there will be significant changes,” said Matt Coleman, Colorado president of HUB International Limited, insurance brokerage firm.

In recent years, it’s been a buyer’s market when it comes to property liability and workers compensation insurance. But, for the first time in a half decade, those sectors saw slight increases in rates in November signaling an end to a soft market, said Richard Kerr, CEO of MarketScout, a Dallas-based insurance exchange. Commercial property insurance went up 2 percent in November and workers compensation went up, on average, 2 percent.

“After six years and eight months the soft market cycle has finally broken,” he said. “November 2011 is the first composite rate increase since the soft market began in February 2005.”

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The principle of insurance is that if the customer pays $1 and the insurance carrier pays 95 cents in claims, the insurance firm earns 5 cents. A key to insurance firms’ bottom line has been investment. An insurance carrier could take that $1, knowing he wouldn’t have to pay a claim right away, and invest it.

In recent years the amount of premium dollars collected has gone down — for some agents as much as 25 to 40 percent in workers comp — while claims are generally trending up. Such major catastrophes as wild fires in Texas, tornados in Missouri and an earthquake, Tsunami and nuclear disaster in Japan have impacted the industry.

And, then there is the economy, Coleman said.

“Insurance companies have not been able to realize the investment returns they once did,” Coleman said. “They may have a billion dollars to invest, but where are they going to put it where they can get a return on it?”

“The only thing left is to increase rates,” Coleman said.

This month, Travelers Cos. — the largest American insurance company — CEO Jay Fishman announced that his company had increased prices for business insurance clients by 5.2 percent in October and 5.8 percent in November, the largest rates increases in several years, according to the Wall Street Journal.

That general trend will percolate through the industry, said John Putnam, of Putnam Assurance & Risk Services, an independent consultant who analyzes mostly worker compensation claims. The number of claims has not gone up dramatically over the last year. But, the size of the claims has continued to increase, he said. And, that plays into the rates.

Main Street, retail and small service businesses might not feel the pain of the workers comp rates going up, he said.

“But, for contractors, you are talking about more serious news,” he said.

Many businesses cut safety and training protocols to save money in the tough economy, Putnam said. Or, they ignored safety because the rates were flat anyway.

Now, businesses need to start paying attention to workplace safety, he said. It could make a difference in the rates. One thing underwriters consider is the claims history. For example, if an insurance firm is raising rates on average by 3 percent, it might impose a 7 percent hike on a company that has had a lot of claims. Likewise, the reverse is true of companies that have strong safety programs.

“Times have changed,” Putnam said. “It’s time to pay attention to (safety) again.”

It’s an investment businesses will have to make, Putnam said. There will be less room to insurance shop and underwriters will want to know if businesses have workplace safety programs.

It doesn’t have to cost a firm a lot for safety, he said. For example, Pinnacol Assurance — the state’s largest workers compensation insurance provider — offers seminars on creating a culture of safety in the workplace.

HUB International has about 10,000 clients across the state; of those about 40 percent are businesses that could be affected by rate increases. Most companies have taken workplace safety seriously, Coleman said.

“A fifth of the businesses out there are in for a real surprise,” he said. “This market we are moving into, the buyer has less leverage. It’s a hard market.”