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LONDON, Oct 5 (Reuters) - Insurance prices barely rose inthe three months to September as abundant supplies of capitalallowed insurers to compete aggressively even after paying

outnear-record natural disaster claims last year. The cost of insurance edged up by 0.9 percent during thethird quarter compared with the previous three-month period,insurance broker Marsh

said in a survey publishedFriday. The Marsh survey tallies with others showing that averageprices have risen only moderately despite insured losses of $116billion in 2011. Last year was the

industry's second-costliestfor natural disasters because of Japan's Tohoku earthquake andThailand's worst floods in a half a century. Historically, insurance prices have

jumped sharply in thewake of big payouts by the industry as less well-funded insurersretrench, freeing those still in the market to charge more. Analysts say the subdued price reaction this

year reflectsplentiful supplies of capital as investors fleeing depressedbond and equity markets put money into insurance instead, oftenby buying insurance-linked securities such as

catastrophe bonds. Insurance prices began rising in response to last year'scatastrophe claims in September 2011, having previously declinedor stagnated for about three years amid

intense competition. Companies renewing their insurance during the third quarterhad to pay 1.4 percent more than a year earlier, Marsh said. The broker said the cost of insuring property

againstnatural catastrophes rose, but could fall back again amid a lackof major disasters so far this year. Marsh also said banks were having to pay more for liabilityinsurance, reflecting

worries over the impact of the euro zonesovereign debt crisis. (Reporting by Myles Neligan; Editing by Hans-Juergen Peters) (([email protected])(+44 207 542 13 73)) Keywords:

INSURANCE PRICES/CLAIMS