Robert P. Hartwig, the Institute's senior vice president and chief economist, in his report on the survey--"Earlybird Forecast For 2003"--said the average forecast calls for an increase in net written premiums of 12.3 percent in 2003, resulting chiefly from increased prices and to a lesser extent from higher demand.

The Institute said that while the increase is high by recent historical standards, it represents a material decline from the 13.6 percent average gain estimated for 2002?the first such deceleration since 1998.

Mr. Hartwig's report warns that the 3-to-4 year duration of previous hard markets suggest the current one may end shortly, and finds other predictions are "disturbing and sobering."

The 3-to-4 percent return expected in 2002, while improving, was called dreary compared to the general 10 percent return on investment expected of the industry.

The forecast combined ratio of 103.3 in 2003, the report noted, doesn't come close to generating the 10-to-15 percent return on equity investors expect.

According to the Institute, in the current investment environment, combined ratios must fall below 95 before the industry's financial performance approaches consistency with the risks it assumes, and 2003 is too soon for the hard market to end for most insurers.

The survey projected that the combined ratio will hit 103.3 for 2003, down from an estimated 106.3 in 2002 and well below the terrorism-impacted 115.7 result in 2001.

The Institute said while the results show improvement, the industry will still be paying out $1.03 for very $1.00 it takes in.

The Institute noted that a full industry recovery is proving slow and difficult as insurers continue to be battered by high jury awards, surging asbestos claims, soaring medical inflation, high catastrophe losses, a crisis in corporate governance, loss of critical capacity, a weak investment environment and the aftermath of the Sept. 11, 2001 terrorist attack.

The report found that insurance has become more affordable compared with past decades. It also found that p-c insurers managed an investment gain (consisting primarily of investment income, realized capital gains/losses and stock dividends) of 8.7 percent of earned premium in 2001.

"While down from the 10-year average gain of 10.1 percent, most people would gladly trade the performance of the industry's portfolio for the double-digit negative returns experienced by most investors over the past few years," Mr. Hartwig noted.

Among the 12 companies surveyed, the highest numbers for change in net written premiums came from Bear Stearns & Company, which estimated the figure as 16.1 percent in 2002 and 18.4 percent for 2003. This compared with a Goldman Sachs estimate of 11.5 percent in 2002 and a prediction of 10 percent in 2003.

Examining combined ratio, Conning & Company estimated 109 in 2002 and 105 in 2003. Bear Stearns estimated 104.6 in 2002 and 99.9 in 2003.