“With five-plus years of declining pricing and aggressive reserve releases, irresponsible companies will get their day of reckoning when it does turn,” he warned. “It will occur when [loss] development exceeds prior-year loss picks and there is not enough surplus or investment income sufficient to pay claims.”

He added that “confidence fails first, fear sets in and the rest follows quickly when it does. When we [as an industry] can't fulfill our covenant, which is to pay claims, and fulfill shareholders' expectations, the tipping toward a hard market will occur.”

Christopher Timm, president of Century Insurance and executive vice president of Southfield, Mich.-based Meadowbrook Insurance Group, said the tipping point will not come this year. “While we acknowledge that all the signs are there that a rational business environment would dictate a turn, the insurance market has, in my career, always defied such rational conclusions,” Mr. Timm said.

“Looking back at the last several cycles, the industry combined ratio had to spike well above 105 for three or more years before a significant turn occurred,” he noted. “Another general precursor has been failures of large insurers, which has a sobering effect in executive suites all around the country.”

Mr. Timm added that “my gauge of a market turn for our industry is when our hit ratio goes up at the same time application flow increases, and use of IRPM [individual risk premium modification] credits subsides.”

He said that “in softening cycles we see, especially in the first few years, an increase in applications due to shopping activity with a corresponding decrease in hit ratio and increased use of IRPM.”

At All Risks Ltd., President Matt Nichols said reports from the trenches of the retail broker community are one key indictor of pricing turns for the Hunt Valley, Md.-based wholesaler. “We'll simply look at it from the standpoint of what we hear from our clients,” he said.

Speculating on the driver of the next turn, he said that “ultimately several carriers will have to go out of business in order for there to be a huge change in the market.”

He added that “I don't think a hurricane does that. I don't think an earthquake does that. Certainly, we all hope that nothing like 9/11 happens again. Possibly something like that changes the market, out of fear if nothing else.”

Barring such a cataclysmic external event, “one or two major carriers would have to fail and be forced out of business in order for there to be some level of significant market change,” he said. “Otherwise, I think we teeter back and forth between picking up a percent [to] down to flat over the next year or two.”

Jonathan E. Michael, CEO of RLI Corp. in Peoria, Ill., said he keeps his eye on industry results as a broad leading indicator of market turns.

“We've had a dearth of catastrophes in the past year. Insurers continue to show reserve releases. Even during the fourth quarter [of 2009], we continued to see releases and [calendar-year] combined ratios under 100,” he said, noting that underwriting profits continue to be reported on an industry-wide basis.

“The other thing I look at is the capitalization of the industry, and the industry is very healthy today in terms of capital,” Mr. Michael said.

Kevin Westrope, president and CEO of Kansas City, Mo.-based Westrope, offered a similar assessment from a broker's perspective. “The big stock companies keep crowing about what great combined ratios they have, but what they don't tell people is how much reserve takedown is in those numbers,” he said.

“There comes a point where there's only so much reserve takedown left. And until they reach that point, and the combineds begin to climb, I honestly don't see a whole lot of change happening, barring some major catastrophe this year,” Mr. Westrope said.

Eventually, however, “things will change,” according to RLI's Mr. Michael said. “I'm sure they will.”

“At a micro level, when the underwriters who are writing the business realize that they're writing business at an underwriting loss, that's going to trigger some kind of a change,” Mr. Michael added, speculating that underwriting results for the current accident year are at or above breakeven.

(Accident-year combined ratios exclude the changes in prior-year reserve levels captured by reported calendar-year combined ratios.)

“We as senior management can talk about it as much as we like. We can try to force change on the underwriters, but the reality is they're the ones pulling the trigger,” Mr. Michael concluded.

Tony Markel, vice chair of Markel Corp., gets no indication from his underwriters that change is imminent.

“Our people are very close to the firing line, and the intelligence that I get is that competition is still rampant, rates are certainly not going back up, and in some cases are going down still,” he reported. “There seem to be a lot of new entrants with appetites, although they're going to have to burn their way into the market at these levels.”

When will Markel know the turn is here?

“It's day to day,” he said. “You'll start to see a tightening in the standard markets, and maybe rate levels start to creep back up because they're really below where they need to be right now.”

However, he added, “at this stage of the game…my people tell me there is nothing occurring in this marketplace that gives them a lot of optimism with regard with any real fundamental changes this year,” Mr. Markel said.