NU Online News Service,Jan. 19, 3:00 p.m. EST

The bottom-line results in the property andcasualty industry are driven by underwriting, not the economy.

Robert Hartwig, president of the InsuranceInformation Institute, said in a recent presentation, “PersonalLines P-C Insurance Markets: Challenges & Opportunities for2011 & Beyond,” that the p&c industry is already at thetipping point, recording about a 100 combined ratio in 2010.

In 2011, “underwriting profits and loss willdrive the cycle,” Mr. Hartwig said. The industry was only able tomuster a 100 combined ratio in 2010 because reserve releasesknocked several points from the ratio, he said.

“Managing for an underwriting profit is key,”Mr. Hartwig added.

Reserve releases have “perpetuated the softmarket.” Essentially, they have “temporarily masked calendar yearresults” to make it appear results are better than they are. Thepool of reserves available is dwindling.

Additionally, investment income is decreasing,so it will not offset future underwriting losses.

An improving economic environment does provideopportunities for growth. Job growth and improved credit marketconditions are expected to boost auto sales and home construction,Mr. Hartwig said.

Net premiums for personal lines experienced aslight uptick in 2010 during the second and third quarters of 1.3percent and 2.3 percent, respectively, compared to the prior yearquarters.

Prior to the second and third quarters of 2010,the last quarter with a noticeable increase in net premiums was thesecond quarter of 2007, with a 2.1 percent increase.