While executives on third-quarter-results conference calls saythey are seeing improvements in the rate environment, InsuranceInformation Institute President Robert Hartwig believes the starsare not quite aligned yet for a market turn—and a recent reportsuggests the impact of rate increases in 2012 could be tempered byexpectations of low investment yields.

Speaking to analysts on aconference call, ACE Ltd. CEO Evan Greenberg said September was thebest month for pricing this year.

But some companies continue to write irresponsibly, he noted:“They don’t know any better. I’m convinced many of them don’t knowthe difference between what’s an adequate or inadequate price.”

Greenberg said the best companies “are endeavoring to do what wedo and show discipline. And they are trying to press the market torecognize a price that reflects the risk.”

Thomas F. Motamed, CNA Financial Corp.’s chairman and CEO, saidduring his company’s third-quarter conference call, “We see ratescontinuing to get stronger in commercial,” noting a progressiveincrease in rates of 1.2 percent in the first quarter, 1.8 percentin the second quarter and 2.4 percent during the third quarter.

“The visibility of a cycle change is even more evident,” saysW.R. Berkley CEO William R. Berkley, noting that prices during thequarter were up 3 percent from a year ago.

But Hartwig points out that many of the factors that need to bein place for a property and casualty market turn aren’t currentlythere—at least not enough to cause the type of sharp turn toward arobust hard market.

He says four criteria must be met for a market turn: sustainedunderwriting losses, material decline in surplus and capacity, atightening reinsurance market and renewing underwriting and pricingdiscipline.

In past market-hardening periods, all lines of insurance weredoing poorly and each contributed to rapid rises. That is not thecase this time, he says.

“For instance, private-passenger auto is not doing poorly, andthat is one-third of all premiums written,” says Hartwig. “Alllines are not contributing to an overall market turn. The overallmagnitude of any turn won’t be as strong as in the past.”

Meanwhile, an “Industry Update” by analyst firm Keefe, Bruyette& Woods (KBW) suggests that while P&C insurers are“excitedly discussing” the prospect of 2012 rate increases andimproving loss ratios, the net impact of such a development willlikely be challenged by a sluggish investment environment.

“In a scenario where loss ratios improve modestly whileinvestment yields decline, the net impact for most appears to beclose to a wash,” the firm said.

Making matters worse for insurers, KBW added that lowerreinvestment rates “appear to be more of a certainty than improvingloss ratios.”