The market "can't make up its mind," he said. "It's waiting to be prodded to firm up."

He attributed the hardening trend to insurers' limited investment income and capital gains support.

According to the survey, renewal prices stabilized, or even slightly increased for some lines of business, but some leading indicators of market direction signaled further declines.

General liability, for example, a line typically responsive to changing market conditions, showed clear signs of firming, while property, often a leading indicator of market conditions, fell a further 4.3 percent in the latest quarter.

"It seems like a market in search of a reason to move in one direction or another," Karen Beier, member of the RIMS board of directors, in charge of the membership and chapter services portfolio, said in a statement. "Indications are that the market is near its bottom and waiting for a catalyst to nudge it in the other direction, but it is still unknown what that catalyst will be."

Other seemingly contradictory indicators demonstrate the unsettled nature of the first soft market since 1998. For instance, while directors and officers liability insurance was among the strongest lines in the most recent hard market, it lately has suffered some of the steepest premium declines of any major coverage.

The survey found that although prices continued to decline this quarter in general, anecdotal information indicates that larger insureds are experiencing stable-to-increasing premiums.

Larger, macro-economic conditions also demonstrate the contradictory nature of the market. Overall, the p-c industry continues to enjoy strong financial returns, which typically portends heightened competition and falling rates. However, an analysis of other factors suggests that prices may be on the verge of strengthening.

"Rates fell sharply across most lines through the last quarters of 2004, but those decreases are only now being reflected in earned premium," Mr. Bradford explained.

"As the effect of reduced prices hits the financials of insurance companies, and without strong investment income and capital gains to offset underwriting losses, we can expect to see prices turn upward again," he added.

In addition, further loss reserve increases, earnings adjustments following the reassessment of finite reinsurance transactions, and continuing losses from natural disasters could impact earnings and erode capacity, placing further upward pressure on premium levels, he noted.

"This could be a lull before another round of price declines--or, more likely, it could be the last gasp of a shallow and relatively short-lived soft market," Mr. Bradford continued. "Only time will tell."

Risk managers who contribute insurance schedule data to the survey can benchmark both the structure of their commercial insurance programs and the cost of insuring their risk against a highly relevant group of similar companies.

The results of the survey are available online, published continuously throughout the year, and in a book, published once each year. Details are online at www.rims.org/benchmark.

Risk management professionals can contribute their data by e-mailing current and prior-year policy schedules to [email protected]. Data also can be sent by fax to Advisen at 212-655-7453. Advisen inputs the data, making it available for online review and comparison within days. Participant support is available by calling 1-800-655-6590, RIMS said.

Callout (no mug):

"It seems like a market in search of a reason to move in one direction or another," says RIMS board member Karen Beier.

Infographic:

Flag: Key Factors

Head: As The Market Turns...

There are a number of factors that will influence whether insurers will start hiking prices again for corporate insurance buyers. Among them:

o As reduced prices hit insurer bottom lines, carriers might be forced to hike rates.

o Without strong investment income and capital gains to offset underwriting losses, insurers are pressured to raise premiums to compensate.

o Loss reserve increases, earnings adjustments after finite re deals are reassessed and losses from natural disasters could impact earnings and erode capacity, forcing prices higher.