Although declining industry surplus would normally spur a hard market, last year's 12 percent plunge is a less potent driver of insurance market conditions than a demand falloff resulting from depression-like economic conditions, some experts say.

Last week, a joint announcement released by the Insurance Services Office, the Property Casualty Insurers Association of America and the Insurance Information Institute revealed that private U.S. property-casualty insurers had $455.6 billion in policyholders' surplus (statutory net worth) at year-end 2008, compared to $517.9 billion for year-end 2007.

Separately, a few days earlier, New York-based Advisen described the unique economic conditions that are stalling a hard market even though surplus–analogous to “supply” in the insurance supply-and-demand equation–is falling.