Mr. Hartwig, like Mr. Bradford, still believes that premium growth struggles will persist in 2011, but he said they will result from soft pricing alone, not from economy-related loss of exposures. “Any residual softness in growth is associated with rate, not with destruction of commercial exposures,” according to Mr. Hartwig.

Even workers' compensation–a line commonly cited as heavily impacted by the recession–is benefiting from the recovery, “as tepid as it is,” Mr. Hartwig said. While unemployment is up, he said, over 1 million private sector jobs were created in 2010.

He noted that the economy, and responses to it, may have an impact on insurer investments. Mr. Hartwig said insurers must come to the realization that the low-yield interest rate environment will be here to stay. The Federal Reserve, he said, is “doing everything it can to keep interest rates low for as long as possible.”

He said pricing in 2011 will need to reflect the investment reality that exists, and he added that this “probably has not fully occurred to this point.”

For commercial lines, Mr. Hartwig said that with the removal of the destruction of exposures, it is possible for the industry to achieve positive premium growth in 2011. Even 2010, he said, may be flat.

Speaking to rates, he said there should be a reduction in the magnitude of decreases in 2011. While there could still be downward pressure, it will likely be smaller than 2010.

At Advisen, Mr. Bradford, in his report titled, “The Insurance Market in 2011: The Lingering Effects of the Recession Fuel Competition,” wrote that “the most likely scenario is that the soft phase of the cycle will eventually bottom out–perhaps in late 2011 or 2012–as underwriting losses due to inadequate rate levels begin to gnaw at policyholders' surplus.”

PERSONAL LINES GROWING

For personal lines, Mr. Hartwig said 2011 could see favorable rates.

Don Griffin, vice president of personal lines at the Property Casualty Insurers Association of America, said personal lines carriers are seeing heightened competition heading into 2011, but slight growth premium-wise. He noted that personal lines have been insulated in some ways from the soft market, compared to commercial lines. While personal lines consumers may be examining their coverages, they still need insurance, he explained.

Mr. Hartwig said after a prior downward trend in the number of new personal autos insured in recent years, the situation is now stabilizing. Additionally, he said, consumers are not always buying the cheapest car on the lot.

He noted that auto insurers will face other pressures in 2010, such as the costs associated with providing medical coverage, particularly in no-fault states. If the economy does pick up, auto insurers could also see some uptick in claims frequency, he said, noting that the frequency dropped in the bad economy with people driving less.

For homeowners insurers, however, he said there is not much in the way of growth of new homes. Construction is mired at “near-depression levels,” he said.

In another recession-related development impacting personal lines insurers, the issue of “accident fees” has come up in states around the country, as municipalities try to raise more revenue to close budget holes.

The concept, opposed by the industry, involves charging a fee to either motorists or insurers for emergency service responses to auto accidents. New York City, for example, recently decided to charge motorists close to $500 if the city's fire department has to come to their aid.

The industry contends this is essentially a “double tax,” as taxes are already supposed to pay for these services. Many times, insurance policies do not cover the accident tax. Recently, New York Insurance Association President Ellen Melchionni said personal auto insurance premiums could increase if insurers were required to pay for the accident fees.

Dave Snyder, vice president and associate general counsel, public policy, for the American Insurance Association, said the public is with the industry in opposing these fees. The public reacts negatively to the accident fees when the issue is brought up in the light of day rather than behind the scenes, Mr. Snyder said.

But Neil Alldredge, senior vice president of state and policy affairs for the National Association of Mutual Insurance Companies, pointed out that a problem insurers face in combating the issue is that it is not brought up in the light of day. Many times, he said, the idea is raised at the municipality level, and insurers do not find out about it until it has already passed.

Still, PCI's Mr. Griffin said the industry has had success getting state legislatures to ban the fees after municipalities pass them, and Mr. Snyder said the industry is on guard for other similar issues going forward, as states and municipalities struggle in the current economy.

Ultimately, for property and casualty insurers, Mr. Hartwig said 2011 will be about hoping the U.S. economy grows, resulting in further growth in exposures. The recent extension of the Bush tax cuts should help contribute to faster economic growth, he said, although he noted the longer-term fiscal effect of the policy is in debate.

Insurers should also maintain interest in the country's fiscal policy, he said. He noted that some hold the view that the policies pursued by the Fed and the administration could lead to “extraordinary inflation” going forward. He added, however, that Federal Reserve Chairman Ben Bernanke claims he can unwind the stimulus easily, and there has been no evident yet of a rapid acceleration in inflation.

Globally, both Mr. Hartwig and Advisen's Mr. Bradford said the changing economic landscape means insurers are beginning to look to emerging markets, rather than the United States or Europe, for growth opportunities. This strategy comes with its own risks, as insurers must become familiar with the regulatory and economic realities of new countries.

In the emerging global economic environment, Mr. Snyder said American businesses need to be “quicker and more innovative,” suggesting that the insurance regulatory structure should accommodate this reality. For example, he said he would like to see commercial lines filing requirements streamlined.

The p&c industry, he said, can contribute more to the economic recovery if it can respond more quickly to product and price demands. Mr. Snyder stressed that he is not advocating cutting back on solvency regulation, but rather removing unnecessary hurdles insurance companies must negotiate to meet the needs of customers.

The objective, he said, is for an effective regulatory system that imposes the least amount of costs on the industry.

STATE BY STATE

NAMIC's Mr. Alldredge said he believes post-election turnover in state houses throughout the nation may help the industry with regulatory reform messages. He said there was progress being made–states were moving away from prior-approval rate regulation–before the economic events of 2008 and 2009.

With the 2010 elections, new governors will appoint new commissioners and Mr. Alldredge is hopeful that the industry–and regulators–will get back on that pre-recession regulatory track.

Mr. Griffin said the post-election turnover in state lawmakers and governors means industry representatives will have to expend energy educating new legislative representatives on old issues.

On a positive note, he said election results provide an opportunity to “to right the ship in Florida” regarding the state's property insurance issues.

Mr. Hartwig agreed. “The era of [Gov. Charlie] Crist and his anti-insurance platform is now over,” he said, adding that the industry will work hard with the incoming governor to develop solutions in the state. “Almost anything would be better than the status quo” that drives insurers out of the Florida market and subjects the state to an unnecessary risk of bankruptcy, he said.

All industry representatives who spoke with NU mentioned credit-based insurance scoring an old issue expected to pop up again around the states in 2011.

Credit scoring comes up in about 20-25 states every year, Mr. Hartwig noted.

“We're ready when the issue comes up,” AIA's Mr. Snyder said.

Mr. Alldredge said the new crop of state legislators could raise more questions regarding the use of credit information. But while the issue comes up in about the same number of states every year, “the votes are swinging more in our favor,” he said,

Consumers are not “marching on state houses about this issue,” he said, giving his view of one reason for the trend.