Moderating a state-of-the-market panel discussion here during the annual convention of the Kansas City, Mo.-based National Association of Professional Surplus Lines Offices, Ltd., Mr. Williamson said that an "unexpected rebound on Wall Street would be the only severe positive that might shorten the length of the hard market because of the pressure to produce an adequate return-on-equity."

The NAPSLO panelists cited four trends that will keep prices high and coverage scarce for at least the next 18-to-24 months:

? Shrinking capacity and soaring premiums for reinsurance. ("Reinsurance is locked into a very tight market, with a prolonged cycle that could last up to three more years," according to Mr. Williamson).

? Rising frequency and severity of liability claims, fueled by skyrocketing jury awards and litigation costs.

? The risk of another catastrophic terrorism attack.

? The plummeting stock market and low interest rates, undermining investment earnings for insurers and forcing them to write risks at a profit.

Without a significant, long-term turnaround in at least one, if not all four of these trends, insurers are unlikely to slow price hikes or ease coverage restrictions anytime soon, the panelists agreed.

"If you're a broker, you're in a growth market, although you have your work cut out for you. But if you're an underwriter who is expected to turn an underwriting profit, this market is not for the faint of heart," said Patricia Roberts, president and chief executive officer of General Star Indemnity Company, part of the General Reinsurance Group in Stamford, Conn.

"Disciplined underwriting is the only way we're going to survive," she added.

The terrorism threat loomed large over the discussion. Although the industry's exposure is much more limited now because coverage has been excluded or capped by many insurers, there is still substantial fear of the impact another attack could have on the economy in general and insurance in particular.

"Another catastrophic terrorism loss could be disastrous for the industry," said E.G. Lassiter, president and CEO of Royal Specialty Underwriting, Inc. in Atlanta. "For one, it would be a public relations debacle [because so many would be uninsured this time]. I also foresee an unbelievable amount of litigation over exclusions [for terrorism losses] at an enormous cost."

There was also skepticism that Congress would put an adequate federal terrorism reinsurance backup mechanism in place. Calling Sept. 11, 2001 "the defining moment of our insurance careers," Mr. Lassiter lamented that "Congress may not act unless there is another event. If there is one, we'll all be looking for some serious government assistance."

Mr. Lassiter said that underwriters inundated with business are "unable to respond to all of the accounts submitted," not only because it is a hard market, but because of a "shortage in [underwriting] talent to handle it."

He predicted that price hikes would moderate and rates would stabilize over the next couple of years, "assuming no significant catastrophe losses." He said the market's development will vary by product line, location and industry, as underwriters carefully slice-and-dice exposures to assure profitability.

A report by A.M. Best in Oldwick, N.J. on the state of the E&S market, released at the NAPSLO convention, noted that direct premium volume for surplus lines insurers soared nearly 35 percent in 2001, compared with 11 percent by the overall p-c industry.

"If you're not having a profitable underwriting year now, you're doing something wrong," Mr. Lassiter quipped.