However, he said the firm also anticipates deterioration in the loss ratio due to eroded premium rate adequacy and expected thinner loss reserve releases.

Still, “while the overall combined ratio increase is a significant 2.5 points under average catastrophe load, implied return on equity should increase to approximately 7 percent due to the positive impact of realized capital gains,” he explained.

The study–”Property-Casualty Forecast & Analysis”–predicts industry growth through 2012, based on Conning's proprietary model and analysis of key industry drivers, as well as statutory data filings, public insurer results and 2010 catastrophe loss estimates to date.

Preliminary 2009 data indicates over $5 billion of realized cat losses that mostly were recognized in the first half of the year, the report said. For 2010, 2011 and 2012, Conning is projecting insured catastrophe losses each year of around $20 billion.

“Looking beyond 2010, more robust growth for the property and casualty industry in 2011 and 2012 will result from increases in both exposures and premium rates,” said Conning Research Director Stephan Christiansen.

“While personal lines is leading the industry even in 2010 with robust premium rate growth, many commercial lines–and particularly workers' compensation–will not see improvements in combined ratio until 2012,” he predicted.

More details about the study are available at www.conningresearch.com.

Looking at the market from the producer's perspective, soft rates for the commercial sector show little evidence they will change in the near future, according to the Council of Insurance Agents and Brokers. The Washington-based producer association's quarterly survey of brokers showed average rate declines virtually unchanged on a quarter-to-quarter basis.

The CIAB survey found rates fell overall by an average of 5.3 percent for the first quarter of this year–just slightly better than the drop of 5.6 percent experienced during the fourth quarter of 2009. Average rate declines have fluctuated around 5 percent all through 2009 into 2010, CIAB noted.

“We don't see much change from the last quarter,” CIAB President Ken A. Crerar said in a statement. “Carriers are still competing ferociously for new business, and that's keeping rates soft.”

He said while “there was some wishful thinking on the carriers' part to increase rates on renewal, that didn't stick if there was any competition for business.”

Looking ahead, he said that “until demand picks up, we don't see any significant uptick in commercial rates for the foreseeable future.”

On a quarter-to-quarter basis, rates stood virtually unchanged, with an average drop of 3 percent for small accounts and 7.4 percent for large accounts. Midsize accounts saw a slight change, going from an average decline of 6.3 percent in the fourth quarter to 5.7 percent in the first quarter of 2010.

The CIAB noted from comments submitted by member brokers surveyed that while some carriers tried to increase rates on renewal, most were happy to keep renewals flat. However, carriers were aggressively chasing new business, the survey found.

The survey noted that the softening trend “is taking a toll on the surplus [lines] market,” as capacity remains plentiful and carriers look for new business “wherever they can find it.”

The recession still has a hold on clients' purchasing of insurance, as 75 percent of respondents said they saw no increase in demand in the first quarter, the CIAB noted.

Of the 14 lines of insurance surveyed, surety bonds had the highest increase, with 12 percent of respondents saying rates were up 1-to-20 percent. However, 40 percent said rates for the line were unchanged.

Broker errors and omissions had the next highest increase, with 9 percent saying the line had increases between 1- and 10 percent. Thirty percent of respondents said there was no change in rates.

RIMS OUTLOOK

A third survey from the buyers' perspective found that the soft market, now in its seventh year, shows few signs of loosening its grip on commercial pricing.

The Risk and Insurance Management Society's “Benchmark Survey” found that average premiums in every line tracked fell in the first quarter.

Forecasts for an above-average hurricane season, however, may signal rising premiums on the horizon–at least in property-catastrophe coverage, according to the report, administered by Advisen Ltd.

“Insurance capacity is abundant throughout the commercial lines market, but the lingering impact of the global recession has reduced the demand for that capacity,” Dave Bradford, Advisen executive vice president, said in a statement.

“Abundant capacity coupled with diminished demand keeps downward pressure on rates,” he noted. “As things now stand, insurance buyers can anticipate another year of favorable insurance prices, although catastrophe claims always are a wild card in the pricing cycle.”

As has been the case throughout much of the soft market phase, the report said, general liability was the most competitive line during the quarter, with the average premium falling 4.4 percent.

The average property premium, which had been essentially flat over the past several quarters, fell 2.9 percent. The average workers' comp premium was down 2.0 percent.

Directors and officers liability prices fell 1.1 percent. D&O average premium had been flat-to-slightly-higher throughout 2009 due to rate increases in the financial institution sector, but those increases now have abated, according to the report.

“Rate levels are down, but insurers nonetheless posted good results in 2009,” noted Robert Cartwright, loss prevention manager for Bridgestone Americas Holding Inc., as well as a RIMS board member.

“As a result, underwriters have not been highly motivated to push for higher premiums. That certainly is good news for risk managers,” he said.

“Forecasters are calling for an active hurricane season this year, though,” Mr. Cartwright warned. “Large catastrophe losses could cause prices to increase across the board.”

Colorado State University hurricane forecasters are calling for 15 named storms, eight hurricanes and four major hurricanes in 2010.