By Gary S. Mogel,(Investment News)

Hurricane season starts June 1, but the best advice for worried clients who own substantial amounts of shares in property insurance companies is to stay put, industry observers say.

"When storms start forming, people often sell their insurer stocks in fear, and that's a mistake," said Cliff Gallant, senior vice president of research for Keefe Bruyette & Woods Inc. in New York. Insurer share prices - even if they decline in the short term because of anticipated or actual hurricanes - almost always bounce back, he added.

"If it's a Category 3 or 4 storm, stock prices of affected insurers will likely drop.

But when [premiums go up] as a result, that can send the stocks back up again," said Steven Kauderer, managing director and leader of the insurance industry practice for Mercer Oliver Wyman in New York.

"Insurance stocks often rise due to hurricanes," said Bruce Zaro, chief technical strategist for Delta Global Advisors Inc. of Huntington Beach, Calif. Due to extensive hurricane-related claims, state insurance departments usually approve insurer requests for large premium increases, he said.

"These higher premiums increase earnings, which makes stock prices rise," Mr. Zaro said.

"Consumers know that they have to insure their homes, so they'll pay whatever the market tells them to pay," Mr. Gallant said. "Insurance is all about supply, as the demand is always there."