Instead of the traditional cycle — a hard market followed in relatively short time by a soft market — it appears that we are caught in a long-term soft market. Do you think this is the "new normal?"Franzese: When I started in the business in 1985, we were in the midst of my first and only hard casualty market. That lasted only about 18-24 months. With the exception of a few specific classes of business like residential home building and long haul trucking, there really has not been a hard casualty market since. When the casualty hard market ended in 1986–87, we had a prolonged soft market until Hurricane Andrew. That hard property market seemed to only last a year or so. The next catastrophic event was obviously 9/11. This created a specific type of hard market as carriers started becoming concerned with terrorist threats. Then came the eight hurricanes of 2004 and 2005. The property marketplace firmed up dramatically for about a year, but things started to ease quickly.

When speaking with customers or staff today, I generally make the comment that "the market is the market." E&S wholesalers and carriers need to operate in whatever market we have. Soft cycles have always lasted longer than hard ones. Fortunately, there is a high degree of efficiency in today's insurance marketplace. This will allow the market to make adjustments quickly when something occurs to firm the market. Therefore, soft markets will continue to last longer and hard markets — if they occur — will be shorter. Gabor: I don't know that there ever was a normal. The cycles have all taken on different appearances for as long as I have been in this business. The one constant, however, is that the soft market swings of the cycle have been getting longer, the hard market swings shorter, and the upward swing is more of a spike up and down. This current cycle seems so much worse because we have also had the impact of the weak U.S. economy. This has had an impact on premiums, driving them down due to insureds' decreasing revenues. Having said that, we will see the market swing upward once again. It is just a matter of when. I have no doubt that it will happen, I just don't have a date in my calendar for when it will occur.

Wolf: No, I do not think this is the new normal, but will allow that the cycles may be longer than in the past. However, premium rates tend to move in 6 to10-year cycles with certain lines of business affected sooner than others and for different reasons. The current soft market cycle for all lines began in 2003. While Florida saw extreme tightening in the property market as a result of the storms in 2004 and 2005, soft market property pricing began to return to Florida in mid-2007 and continues today. To some degree the market cycle has been complicated by the global recession of 2008 and 2009. This has served to prolong the cycle. The industry remains well capitalized, but not over capitalized. The latest reinsurance rate reductions we've all heard and read about of 5 to 10 percent will certainly add fuel to the continuing soft market cycle. What will it take to move us into a hard market? Franzese: The obvious response is: A major catastrophe in the United States or possibly Europe. [Edito'rs Note: These conversations took place prior to the disaster in Japan.}The size of the catastrophe would have to be significant, probably in the $100 billion range. There is always the possibility of the next asbestos-type of casualty exposure, although carriers today are quick to respond to control these issues via coverage modifications.