The 5-year soft market is coming to an end, according to a report by Advisen Ltd. The company predicts that average rate levels for commercial insurance will level off by the second quarter of 2009 and begin to rise in the fourth quarter of 2009 or the first quarter of 2010.

Advisen estimated the property-casualty industry was $100 billion overcapitalized at the end of 2007. U.S. policyholders' surplus declined $3.6 billion (7 percent) during the 12 months that ended Sept. 20, 2008, according to A.M. Best. Towers Perrin predicted there would be up to an $80 million decrease in surplus by 2008′s end.

Advisen states that because of the absence of large insured natural catastrophes, underwriting losses combined with weak investment returns should begin increasing rates in 2009 and 2010. One or more large catastrophes could accelerate the process. However, Advisen predicts that the global recession may delay the return of hard market conditions by suppressing demand for insurance.