On the final day of the conference, agents met to hear a panel discussion with three insurance-industry CEOs and the president of the Insurance Information Institute on the state of the industry.

The group consensus was that the prolonged soft market is at an end and is being replaced by a gradual turn that agents and brokers will see over this year and into next.

“The era of mass-exposure destruction has ended,” said Bob Hartwig, president of the I.I.I.

Prices are beginning to firm in the sense that insurers are not granting dramatic decreases on the businesses they write, Hartwig said. Over the next two to three years, rates will move up gradually as carriers flee inadequately underwritten business and work to replace their reserves.

Bill Berkley, chairman and CEO of W.R. Berkley Corp., said one of the primary drivers of the new market direction will be the realization that pricing cannot continue as it has in the past and needs to change. Whether it will be a single dramatic event, the realization that reserves are inadequate, or an increase in reinsurance rates, there will be a mind change precipitating the market change.

“I can’t tell when the mind will turn from greed to fear,” Berkley said. “How dramatic [the rate increase] will be, we will have to wait and see.”

Greg Murphy, chairman, president and CEO of Selective Insurance Co. of America, said he has been through three hard-market cycles, and this will be the first underwritten with market sophistication, where insurers will have the data to approach underwriting on a selective basis. He said insurers who lack the data to write risk on a sophisticated basis will “be in trouble.”

Jim Clay, CEO of Westfield Insurance and Westfield group leader, said he sees rate increases coming on a line-by-line basis and not coming as an overall industry increase. Workers’ compensation is one line in which his company is experiencing rate stabilization. Rate increases will also be affected by geographic location, he added.

Speaking with NU after the panel session, Hartwig said that in the past a single catastrophic event would be the impetus for a market turn; today it lacks the same impact.

However, insurers’ exhaustion of their reserves from years of inadequate pricing has left them with “the painful reality” that adjustments are needed, he continued.

Reinsurance rate increases would also be a contributor in the change in market direction, and there will probably be some rate firming on property catastrophe as reinsurers deal with the impact of recent losses, Hartwig noted.

“This will not be the rigid hard market of the last three cycles. This will occur on a line-by-line basis,” Hartwig said, echoing Clay’s comments.