Bill Berkley, chairman and CEO of W.R. Berkley Corp., said one of the primary drivers of the new market direction will be the realization that pricing cannot continue in the direction it has been and needs to change. Whether it will be a single dramatic event, the eventual realization that reserves are inadequate or an increase in reinsurance rates, there will be a mind change that will precipitate a change in market direction.

“Can't tell when the mind will turn from greed to fear,” Berkley said, adding that “how dramatic [the rate increase] will be, we will have to wait and see.”

Greg Murphy, chairman, president and CEO of Selective Insurance Co. of America, said he has been through three hard-market cycles, and this will be the first that will be underwritten with market sophistication and where insurers will have information to approach underwriting on a selective basis. He said insurers who lack the data to write risk on a sophisticated basis will “be in trouble.”

Jim Clay, CEO of Westfield Insurance and Westfield group leader, said he sees rate increases coming on a line-by-line basis and not coming as an overall industry market turn. Speaking to his company's experiences, he said workers' compensation and other niche products are already seeing rate stabilization.

Rate increases will also be affected by geographic location, he added.

Speaking with NU Online News Service after the panel session, Hartwig said that while in the past a single catastrophic event would have been the impetus for a market turn, it does not have the same impact today.

However, a systemic event—such as an “adverse turn in the tort environment”—could affect the market, but there is nothing on the horizon to cause such concern, he added.

However, insurers' exhaustion of their reserves from the years of inadequate pricing has left them with “the painful reality” that adjustments are needed, Hartwig continued.

Reinsurance rate increases would also be a contributor in the change in market direction, and there will probably be some rate firming on property catastrophe as they deal with the impact of recent losses, Hartwig noted. What impact the upcoming hurricane season will have won't be felt into 2012.

“This will not be a rigid hard market of the last three cycles,” Hartwig said. “This will occur on a line-by-line basis.”