Robert H. Moone, chairman, chief executive and president of Columbus, Ohio-based State Auto Insurance Companies, said: "The current hard market is very different from the one that occurred in the mid 1980s. In the 80's hard market, there was lack of capacity. The current hard market is price-driven," he added. "It is, in reality, sound pricing."

Thomas B. Ahart, president of broker Ahart, Frinzi & Smith in Stewartsville, N.J., noted that he is starting to see a softer market in small commercial lines. Meanwhile, "Consumers are wondering when the price increases will end."

J. Robert Wooley, insurance commissioner for the host state of Louisiana, said that the market continues to be hard, but that it is easing. "There is more capacity in the reinsurance market and the treaties are more moderate," he said. "The reinsurers wanted to get their losses back and they did--by charging the primary companies more."

Mr. Hartwig, the fourth panelist, said he saw differing market pictures depending on line of coverage.

"Homeowners coverage is still a big money-loser for insurers and will remain hard," Mr. Hartwig said. "Personal auto, on the other hand, has had a reasonable combined ratio in the low 90s, so prices may go down."

In commercial lines, Mr. Hartwig noted that softness is starting in property coverage, but the "out-of-control tort system" will keep the casualty sector hard. Workers' compensation, which Mr. Hartwig pointed out recently reported a $2 billion underwriting loss, would also remain hard for the foreseeable future.

Commissioner Wooley said that his state attempts to "take the spikes out of the Louisiana marketplace" in order to control costs. "This can be done by changing the way of assessing insurance companies and making it easier for them to accumulate reserves in anticipation of the ?big one' [hurricane] hitting," he explained.

"We have to get rid of this masochistic mentality," State Auto's Mr. Moone offered. He added that the industry needs to take the word "cycle" out of its vocabulary. "Insurers should be willing to sacrifice market share in favor of profits."

Mr. Hartwig went a step further, noting that the hard market--at least in some lines--may have been "cut short."

"So much capacity rushed in after 9/11, and not enough has left," Mr. Hartwig explained. "Capacity is rising ahead of exposure growth."

"Much capital flowed into Bermuda [post 9/11], but it is "transient capital," said Mr. Moone. That capital will be diverted to other uses if investors don't get their expected rates of return, he noted.

Mr. Hartwig pointed out that the property-casualty industry's rate of return was about one percent in 2002 and investors could have done better in treasury securities. He indicated that this year's return could be as much as 10 percent, but other industries are getting 12 to 13 percent. He predicted, "If we don't satisfy investor return requirements, there will be a withdrawal of capital."