With more analytical tools and gauges to monitor property andcasualty insurance price changes available than ever before,industry participants have probably watched the six-year-old softmarket more closely than any that came before.

This year, the measurement needles barely moved, and thecatalysts that have historically inflated premiums to end priorsoft markets were nowhere to be found.

The feeling of being stuck in neutral territory–with few signsof price surges and no major indicators of precipitous price dropseither–prompted some to suggest that stable to moderately decliningprice levels represent a "new normal" for the industry.

More recently, an analyst from Moody's Investors Service,charting the movement of commercial insurance pricing barometerspublished monthly by Dallas-based MarketScout, said "theindustry appears to be entering a pricing 'double dip' with noend to the current soft market in sight."

Moody's Vice President Paul Bauer noted, for example, that eventhough the magnitude of average price drops had decreased–from alevel of minus 5 percent in November 2009 to smaller declinesaveraging 3 percent in the months of May through July–the November2010 barometer dipped back to minus 5 percent once again.

Predictions of a year-end 2010 turn have been few and farbetween, with those insurance executives who ascribed to the most optimistic price-change theories early inthe year pointing to the erosion of loss reserve cushions as onepotential factor that might prompt upward price movements.

Recently, analysts from both Moody's and Fitch Ratings reportedthat reserve levels are roughly adequate, with little or noredundancies left from prior years to offset potentiallyunfavorable loss trends going forward. Neither suggested, however,that the depletion would change the direction of the market byitself.

"The change in reserve strength signals a slight change inbalance sheet quality," Fitch said. "While favorable reservedevelopment is masking…poor underwriting performance, Fitch doesnot believe that a reduction in reserve adequacy alone will promotea hardening of rates," the Chicago-based firm said, noting thatloss cost trends in casualty lines remain relatively stable.

Moody's came to the same conclusion. "At present, no catalystfor a turnaround is apparent, particularly given that the industryjust came through a hurricane season with little adverse impact,which may further reduce pricing in property markets," Mr. Bauerwrote in a recent report.

Still, insurers move into 2011 facing a host ofchallenges–including low interest rates, large concentrations ofmunicipal bond investments, uncertain impacts of health carereforms on medical costs. But even analysts bold enough to suggestthat "insurance markets are teetering" on the brink of changequickly find reasons to hold back on forecasting near-termhardening.

"A pop in loss cost inflation, another round of investmentportfolio losses, or a major loss event could push the industryinto action," analysts at Keefe, Bruyette & Woods wrote in arecent December report titled "2011 Outlook: Stop Waiting For theSky to Fall." But weaker loss reserve positions don't mean insurersare feeling any pain, they said, noting that carrier managementshave conservatively recorded progressively higher accident-yearloss ratios in recent years.

"Doesn't history show that surprisingly bad results must bereported in order for a turn to occur," they added.

"The bottom line is that capital remains abundant," withpremium-to-equity ratios near historical lows, they said.

Throughout the year, most industry experts put the timing of amarket turn out into 2011–and more recently into 2012–focusing onthese same economics of supply and demand to support theirpredictions.

"Prices are now at the lowest point they have been in a decade,but the market is overcapitalized, and demand is weak," said DavidBradford, executive vice president of New York-based Advisen.

Presenting a purely mathematical analysis, Mr. Bradford lookedat ratios of U.S. industry policyholders' surplus-to-GDP over pastcycles, finding that when the ratio reaches a level of 3.2percent–as it did in 2004–the market historically shifts to thenext phase (hard or soft) within 12 months. Given a weak economyand strong levels of industry capital, the ratio is now around 3.6,he indicated in a recent Advisen report, suggesting that the market"may bottom out by 2012."

As of third-quarter 2010, insurers had given back all the pricegains of the 2001-2003 hard market in some lines, he said. Inparticular, workers' compensation and general liability averagepremiums are now below fourth-quarter 2000 levels.

Through the first six months of 2010, aggregate industry netpremiums were flat at $212.5 million, while surplus stood at $530.5million–slipping just below a $540.7 million record posted inMarch.

"Zero[premium] growth during the first half…represents a markedimprovement over the 4.2 drop during the same period last year, andthe 3.7 percent drop recorded for full-year 2009," commented RobertHartwig, president of the Insurance Information Institute. "Theindustry has not recorded positive premium growth on an annualbasis since 2006," he observed.

"If the industry were to record negative growth for all of 2010,it would mark the fourth consecutive year of decline in premiumswritten," he said, noting that the last time net premiums writtencontracted for four consecutive years was during the GreatDepression (1930 through 1933) after peaking in 1929.

Individually, some insurers and brokers bucked the negativegrowth trends with mergers and acquisitions in 2010. Notabletransactions included Max Capital's $3.5 billion combination with reinsurer HarborPoint, Aon's $4.9 billion deal for Hewitt Associates, wholesaler AmWINS' acquisition of competitor Colemont, as wellas smaller deals in which specialty insurers acquired cropinsurance and accident-and-health businesses.

Art caption: Market gauges and barometers continued to point tounderinflated soft pricing in 2010–and conditions may well persistinto 2011, experts say.