From its recent P&C insurance conference in New York, analysts from Keefe, Bruyette & Woods say the general tone of management-team presentations regarding rate increases can be viewed as “somewhat uninspired,” but “the rate environment does continue to gradually improve, helping to offset the crushing pressures of lower investment yields.”

In a report issued last week, KBW says the consensus appeared to “hover around 5 percent for average rate increases” in most U.S. commercial lines. The rates were about the same as earlier this year, the analysts say, “indicating that there appears to be no momentum or acceleration of rates into a traditional hard market.”

Gradual price increases, KBW says, are being driven by the need for better return on equity by carriers.

KBW says several executives “lamented ongoing economic weakness and pointed out that a real boost to volumes would require a better economy.

The financial performance of insurers is not being helped by the 10-year yield on bonds that is below 2 percent, which is negatively affecting investments through all financial markets.

Utilizing some of the data from the Council of Insurance Agents & Brokers quarterly survey of insurance brokers, Charles L. Ruoff, president of C.R. Market Strategies Inc., says if rates remain at their current level of increase, any discussion about rates moving to a hard market “would not be a rational conclusion.”

He notes that the CIAB survey began in the first quarter of 2000 and through that period, prices increased significantly through 2002 before beginning a decline in 2003. Prices dipped below the 1999 level sometime in 2009 and did not climb again until 2011.

This year, rates are coming closer to full cycle, reaching the same level as they were in 1999. The trend, he says, is not pointing to a hard market at this point. He says there are “a reasonable number of [lines of business] where some competition is keeping rates at or below current levels.”

Commenting on the overall state of the insurance market, Jeffrey Carlson, senior consultant, Towers Watson says in an e-mail, “Regarding current market conditions and whether to expect a hard or soft market, it is unclear. A hard market would traditionally be fueled by unprofitable results, inadequate reserves and shortage of capital. I'm not sure we have any of those conditions yet, at least not to a great degree. Our position on reserve adequacy for commercial lines is they are about adequate right now. Our position on commercial lines profitability is that the industry is somewhat unprofitable, but not nearly as bad yet as in prior cycles.”

Updated: Sept. 11, 10:08 a.m. EDT with comments from Jeffrey Carlson.