With 2012's first quarter in the books, executives and industryobservers have noted that property and casualty pricing remains onthe upswing.

There are still varying opinions about whether the increases areuniform across all lines, and whether these increases are enough todeclare that a hard market has arrived. But more appear willing tolean in that direction now compared to comments made afterfourth-quarter results were released.

Following are observations from industry leaders made duringconference calls and in recent analyses in response to 2012first-quarter results.

Ken A. Crerar, president and chiefexecutive officer of the Council of Insurance Agents and Brokers,made perhaps the most definitive statement regarding the state of the market, statingthat the market has made a hard turn.

“We've been cautious up to now about declaring a market turn,but I think it's reasonable to say that the market has made a hardturn after two quarters of price increases and tighterunderwriting,” says Crerar.

“It's difficult to predict length and severity, but the markethas turned.”

CIAB's latest quarterly market survey shows pricing for small,medium and large commercial accounts up an average of 4.4 percentduring the first quarter.

Crerar's outlook is in line with observations made by W.R.Berkley Corp. CEO William R. Berkley, who said ina first-quarter conference call that a turn toward a hard marketcycle is more visible now.

But Berkley added that such a turn could spell trouble for some insurance company somewhere thatwill be “stupid” and not increase rates.

“Hard markets always start this way and then something happens,”which leads to “dire financial difficulties,” said Berkley.Companies run into trouble, he said, when they have to begin payingfor their underpriced past.

“It happened to AIG [American International Group Inc.] but AIGgot bailed out by the government,” Berkley said. “Look at all thebillions of dollars of deficiencies they had to make up for.”

No one knows “where and what is sitting out there,” but “usuallysomeone doesn't have the ability to make it through” the cycleturn, Berkley continued. “I don't know who that's going to be and Ican't tell you for sure.”

At the other end of the spectrum, Markel Corp. Presidentand co-Chief Operating Officer F. Michael Crowleyindicates talk of a hard market may be premature because insurersare not exhibiting the same underwriting discipline for newbusiness as they are for renewals.

In a first-quarter conference call, Crowley says Markel hasheard from its agents that “some carriers are raising ratessubstantially [at renewal], and yet they are being very competitiveon new business—not following the same [underwriting]philosophy.”

The company's executives say positive rate increases are spotty,depending on the line.

J. Patrick Gallagher, chairman, presidentand chief executive officer of brokerage Arthur J. Gallagher, alsosaid pricing is not yet in line with what is seen in a traditionalhard market.

During a first-quarter conference call, he said prices arecontinuing to increase, but not dramatically as is seen in a hardmarket.

“By and large, we are not seeing decreases,” he said.

Carriers are asking for rate increases, especially on workerscompensation and property business, and they are getting it, henoted, but some select lines remain competitive.

In another observation, Gallagher said business in the wholesalemarkets is growing as standard-lines carriers back off of riskstraditionally handled by wholesalers.

In MarketScout's April analysis, MarketScout CEORichard Kerr expanded on the notion that admittedcarriers appear to be in the beginning stages of ceding risks back to the excess andsurplus lines market.

Kerr said, “Recently, we have noticed admitted and non-admittedinsurers are pricing similarly. Historically, there has been aconsiderable difference in the underwriting approaches among thevarious types of insurers. The recent similar pricing strategiescould ultimately lead to more business for the non-admittedinsurers as admitted insurers begin to restrict their risk appetiteand simply decline to write tougher accounts.”

MarketScout's April Market Barometer showed commercial P&Crates up 3 percent for the month.

RLI Corp. President and Chief Operating OfficerMichael Stone provided further evidence thatcomplicated risks are moving back to specialty and non-admittedcarriers. SNL Insurance reports that in a recent conference call,Stone described E&S casualty as a “real bright spot.”

Regarding standard carriers, Stone said he is “certainly …seeing them pull back a bit,” according to SNL.

W. Robert Berkley, president and chiefoperating officer of W.R. Berkley, also observes a gradual increase in the flow of submissions to thespecialty market, but he says some carriers “don't seem to fullyappreciate that things are changing.”

He says there remains a set of irresponsible companies, but theyserve as a “hindrance, not a barrier” to the market shift that isunderway.

“There is somewhat of a lopsided barbell in the marketplacebetween those that are seeking rate adequacy and those that don'tget it,” Berkley says.

Evan G. Greenberg, chairman and chiefexecutive officer of ACE, says the first quarter was “the strongest quarter yet for rate increases, which were morebroad-based.”

Rates for business in the U.S. were up 3.6 percent, he adds.Pricing improved in many property and casualty lines and “modestlyimproved” in some casualty classes, according to Greenberg.

Pre-tax catastrophe losses including reinsurance reinstatementpremiums were $19 million compared to $489 million during 2011'sfirst quarter.

Greenberg says the company improved retention and increased newbusiness while staying away from some lines, such as generalworkers' compensation in the U.S., which continues to beunderpriced.

XL Group's Chief Executive Officer Michael S.McGavick cited improved pricing as one reason for a10 percent increase in first-quarter gross premiumswritten.

He said, “Pricing improved in each month of the first quarter.North American property and casualty rate growth was 5 percent inthe first quarter and rate achievement was accelerating throughoutthe quarter.”

Despite a $207 million drop in net income for the Hartford's commercial-insurancesegment, the company achieved 7-percent rate increases for smalland middle-market accounts and 14 percent increases formiddle-market workers' compensation.

Chief Executive Officer Liam E. McGee says“P&C commercial's pricing momentum continued and retentionremained strong.”

Chubb Corp. President of commercial and specialty linesPaul J. Krump says, “We are pleased with the[Chubb Commercial Insurance]'s average U.S. renewal rate increase in the first quarter of 8percent, continuing the rate momentum that we have beendiscussing.”

He says the first quarter saw renewal-rate increases across theboard in U.S. commercial and specialty lines.

“Further evidence of continued rate momentum can be found in thegrowing proportion of our accounts that are renewing with rateincreases,” Krump adds.

Liberty Mutual Chief Executive David H.Long says improvements in U.S. commercial-lines pricinghelped the company increase first-quarter net income by 26 percent compared to ayear ago.

He says increasing rates are a welcomed development “in light ofthe chronic underpricing in many of these lines, particularlyworkers' compensation.”

Daniel S. Glaser, group president andchief operating officer of brokerage Marsh, says rate increases are more noticeable in property lines comparedto casualty.

In the United States, property, workers' compensation and excesscasualty are all up moderately, he says, while general liabilityand directors and officers insurance are still down. In other partsof the world, rates are mixed.

Glaser says, “You have to look at what geography you're talkingabout and what line of business you're talking about. [The pricingenvironment is] very segmented, and since we participate across allof those segments, its muted from our perspective.”