Auden argues that rates need to rise considerably more than they're expected to for commercial lines to return to underwriting profitability and solid returns on capital. He also says profitability will be challenged because market-underwriting capacity was not materially affected by 2011 loss events.

As a result, he says, recent rate increases have been driven more by a reaction to losses than a real shift in competitive fundamentals.

But rates are expected to continue their upward trend, according to Stifel Nicolaus analyst Meyer Shields. The direct-written-premium results and direct-loss-ratio results of 2011, he says, will lead to increased rates in both personal and commercial lines.

As a further sign the insurance-pricing cycle is shifting, Moody's Investors Service says some companies are reporting strong growth in excess and surplus-lines business, generally a sign that standard-market carriers are tightening underwriting and shedding business.

Moody's adds that pricing surveys and conference calls show that pricing has “passed an inflection point,” and most commercial-lines insurers are reporting rate increases “that they believe to be in excess of their loss trends.”