Their remarks came at the annual meeting of the Florida Workers' Compensation Institute, produced in partnership with National Underwriter Company and New York-based Risk and Insurance Management Society, Inc.

James Roberts, president of the specialty workers' comp division of American International Group in Parsippany, N.J., said that barring unforeseen events, the hard market pricing conditions should continue through 2003.

Prices, he noted, are up 15-to-20 percent this year.

Gregory T. Doyle, executive vice president with the reinsurer broker Guy Carpenter & Company, Inc. in New York, said an earnings gap by insurers would continue to drive a hard market.

He said the recent arrival of new startup companies that have infused the market with additional capital should not depress rates in the near term because the recent arrivals have an expectation of high returns.

Among negative signs in the marketplace that were mentioned, in addition to declining investments and bond yields, was the climb in medical costs for workers' comp insurers. Mr. Roberts labeled this a possible ticking bomb.

Kathleen Langner, senior vice president and worldwide workers' comp practice leader for Chubb Corp., noted that spending on health care costs had gone up 6.9 percent in 2000.

Ms. Langner said that a factor combining with higher medical costs is the aging of the work force, which is approaching a 20 percent level of persons at age 65.

Treatment duration for injury is on the increase, as well as more spillover from injuries provoked by off-the-job activities.

She said that group health care practitioners have been hard pressed and are seeking to find people who can pay more by "tapping the workers' compensation industry."

In Ms. Langner's view, workers' comp insurers must be "more realistic about claim costs."

She warned that some downsizing employers may be economizing in ways that impair their return-to-work programs.

Mr. Roberts noted the need for carriers to "triage" for potential catastrophes on a geographic basis.

He said AIG does not see a major workers' comp risk coming from hurricanes as a result of geographic concentrations of workers. The company is focusing on exposure from earthquakes, but "we take terrorism more seriously than earthquake," he said.

During the session moderated by Sam Friedman, editor-in-chief for the National Underwriter property-casualty edition, the question was asked whether the industry could sustain another blow from terrorism. Ms. Langner responded that, though this could reveal that some firms lacked financial capacity, "the bigger impact would be psychological."

She predicted that, "You would see people retreating from the industry."

Mr. Roberts said a key factor would be the reaction of the federal government and whether it would be willing "to bail out one carrier."